Cash has been around since 600BC but are we getting closer to the end of its lifecycle?
Throughout time, we have had a need to exchange something of one value to something else of equal value but as we move further into the twentieth century, a greater proportion of all transactions are now being done electronically, nominally, many small transactions are being done through the use of a credit cards.
According to recent surveys by Toluna Analysis, 62% of Australians now use credit card for everything where possible. With cash payments now frowned upon for hygiene reasons, it seems the majority of Australians prefer digital or card payments.
Similarly, 60% of respondents said they are very comfortable managing their financial affairs online.
At the same time, governments around the world are seeking to attain better control of the cash economy or the black economy, Australia has recently prohibited cash transactions more than $10,000.
The black economy refers to people who operate entirely outside the tax and regulatory system or who are known to the authorities but do not correctly report their tax obligations.
It encompasses a wide range of practices, including understatement of takings, the payment and acceptance of cash wages off the books, welfare fraud, sharing economy contractors not declaring their income, moonlighting and phoenixing (where businesses deliberately liquidate to avoid paying employees and creditors). Complex interactions with illegal activities, including money laundering, must also be taken into account. Other terms used include: the shadow economy, cash economy, underground economy or the cheating economy.
Participation in the black economy penalises honest taxpayers, undermines the integrity of Australia’s tax and welfare systems and creates an uneven playing field for the majority of small businesses doing the right thing.
With the pandemic restrictions likely to become a way of life for some years to come, people will be more inclined to engage in online transactions and as such, move more towards electronic transactions and be less inclined towards cash.
