Government review of payments finds cash is critical to economy

It was supposed to be all about new technology like cards, phones, online commerce, crypto and digital currencies but the government’s Payments System Review made a surprising finding.

Cash is critical to the economy and must be protected.

Yesterday, treasurer Josh Frydenberg released the long-awaited Payments System Review which investigated how Australia’s payment system is run and governed.

The review recognises that non-cash payment systems are inherently unreliable, because systems can suffer “technical malfunctions or operational mistakes” [p7]

Under a section titled “Consumer Inclusion” the review notes that:

“Certain groups within the community, such as those with disabilities, older Australians, and those living in remote and regional areas tend to rely on legacy payment systems and could face access issues as the payments ecosystem continues to evolve and digitise.

“The regulatory architecture will need to ensure that innovation in the payments ecosystem does not inadvertently exclude vulnerable communities from access to critical payment services.[p89]

The review concludes that:

“While the use of cash may continue to fall in use over time relative to other means of payment, it is expected to remain an important method of payment well into the future, not only for vulnerable consumers but as an important ‘back‑up’ form of payment not tied to the digital economy. Given this, the distribution of cash will also remain a critical system that ensures that there is an adequate supply of cash available across the economy.” [p89]

“The Review considers that cash distribution is a critical function in the payments ecosystem, and that a strategic plan for the payments ecosystem should give consideration to this issue in a holistic manner, [p90]

In plain english, the government is saying cash remains the only truly reliable payments system and that ATMs and bank branches need to remain open and operating so cash is available to everyone. And retailers must keep accepting cash.

The government must also be aware of new data that shows six million Australians prefer to use cash.

The Global Banking & Finance Report 2021 shows that 30% of Australian adults prefer cash to other methods of payment.


The review foreshadows an investigation by the Reserve Bank of Australia into cash (in the second half of 2021) and how the cash distribution industry can be supported into the future.

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