ATMs are going to be harder to find after COVID-19 as Reserve Bank head honcho predicts major changes on how Australians will manage cash, and cheques are most likely going to disappear.
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Australia might move away from cash and cheques entirely
ATMs are likely to be extinct after the coming months, and cheques would follow suit after post-COVID Australia. That's what Reserve Bank of Australia's assistant governor Michelle Bullock sees it, anyway, Australians will be avoiding paying for goods and services with cash even after the COVID-19 pandemic subsides.
Bullock also said that ATM withdrawals in the month of April dropped 30% in just one month and even dropped down to 40% over the last 12 months. Bullock expects that the changes to consumer payment habits will only continue to scale up and quickly reduce the ATMs across Australia as people opt for cashless payments.
Bullock spoke on a Morgan Stanley webcast called "The Evolution of Banks and Payments," mentioned,
"With cash withdrawals declining, there will be further pressure to consolidate ATM networks. The industry had already been considering this issue over the past couple of years, but the changes induced by COVID-19 will make this more urgent."
However, she said some people will still choose cash over cashless payments, so some cash cuts should need to be managed to ensure that no one would be at a disadvantage in certain parts of the population. This only makes sense because removing cash would not be feasible since not everyone has the means for cashless payments.
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Cheques might be going away soon
The use of cheques has been declining for over two decades. Bullock said that transactions had dropped rapidly in recent months, which could finally end the era of cheques and allow people to opt-in on better payment solutions.
"In April, the value of cheque payments was more than 40% lower than 12 months earlier, compared with annual rates of decline of around 20% in previous months. And the level of cheque usage has now fallen to such low levels that there is an active discussion about the future of the system," Bullock said.
More and more retailers are now relying on card payments, and she warned banks that they need to step up the efforts to reduce Eftpos network transaction costs. These are when payments are made, banks go and charge interchange fees to each other behind the curtains, depending on the financial institution of both cardholder and retailer.
The RSA is currently assessing whether they should allow banks to surcharge buy-now-pay-later options since retailers are not given the same option to recoup the cost of installment networks of their customers. "We are talking with merchants to understand their experience with payment costs through this period. We will also be considering how transparency of the cost of the payment plans offered to merchants could be improved."
"Ultimately though, if market forces are not generating competition to lower the cost of debit card payments, we may need to consider lowering the benchmarks that serve as a cap on average interchange fees." So it would only be a matter of time before Australia, and maybe the rest of the world would opt for cashless payments permanently.
