Australia is definitely one of the most developed countries in the world currently. It’s very weird that we can’t refer to it as a western country due to its geopolitical location, but the resemblance is uncanny.
The major difference, however, is how the Aussies are falling behind in adopting fintech and using more digital payments, they’re not even included in the Forbes Top 10 list of digitized economies.
At the moment of writing this article, there are about 36% of Australians that use cash payments as their daily driver. That is around 10 million people disregarding digital payments.
Why are the Aussies reluctant towards digital payments?
The Australians are not very favorable towards digital payments for various reasons, which will, of course, be listed below.
But first, we need to start with one of the largest reasons, which is the government’s relationship with cash in general.
Many of you may have come across news last week about the government introducing a new cash cap for payments. Previously, any payment that was below $10,000 could be processed without the bank’s involvement. But now, that cap has been reduced to $7,500.
The biggest reason was that the government wanted to avoid any tax evasion mechanisms, reduce the black market value in Australia, as well as provide banks more options for tracking customer payments to determine better credit scores. Overall, it is a good introduction for the digital economy, but a rather unconventional one for small business owners, as they now have to invest in digitizing their enterprise.
The Gaming Industry
The gaming industry in Australia is booming, so to speak. Aussies have already been nominated as the “largest losers” when it comes to gaming, both offline and online. The government clearly wanted to reduce those numbers by any means possible and introducing the new law of a cash cap is also a means to do so.
Beforehand, it was not unheard of from locals to go to a casino and waste nearly $10,000 in the Australian VIP casino games venues, due to small restrictions and anonymity.
That’s right. People capable of spending nearly $10,000 on gaming were trying to keep their identities hidden. The main reason was that the banks would track their payments, trace them to a casino, and ultimately damage their credit score. And no matter how rich a person may be, having limited access to things such as mortgage loans and business loans.
Avoiding digital fees
Most Aussies tend to make large payments at the same time. They don’t distribute small ones one by one, but ball them up in one large bill and pay it off straight away.
The benefit of doing so with cash was that there were no service fees attached. Most digital payment providers tend to request transaction fees, sometimes as high as 4%. Therefore, it is expected why an Aussie, making a $10,000 payment would not want to waste $400 in fees.
How is the digital economy being developed?
Overall, the number of Aussies using cash payments may seem quite large for modern standards, but they’ve come a long way from 2007.
In 2007, nearly 70% of Australians were using cash. Having that number reduced to 36% within just 12 years is a great achievement and a boost in confidence for the ruling party.
This introduction of the cash cap is also a move towards boosting digital economy adoption. By the rate it is being developed right now, it is not unrealistic to see less than 10% of Aussies using cash in by 2022.