Saturday, May 21, 2022

Australia Will Be Cashless by 2020 Thanks to New Digital Payments Network

Australia Will Be Cashless by 2020 Thanks to New Digital Payments Network

Australia will take a major step towards becoming a cashless society this year. A new national digital infrastructure, called the New Payments Platform (NPP), is set to debut before the end of 2017.

Also read: Bitcoin’s Fight to Survive Continues as Bitcoin Unlimited, SegWit Debate Reaches a New Climax

The ABC reported today that introducing the NPP could see Australia without physical cash at all by 2020. The system will be free, instant and seamless, operating 24/7 regardless of users’ bank accounts. Banks would also be able to build their own feature layers on top of the network.

The Reserve Bank of Australia first initiated the process to build a new national digital payments infrastructure in 2012. In 2014, twelve Authorised Deposit Taking Institutions joined the project and formed NPP Australia Limited.

Each NPP transaction will be able to carry far more data than current processes, supporting third-party-developed “overlay” services.

Few other specifics on the NPP are available now, but it would likely feature a tap-and-pay mechanism with a focus on speed and simplicity.

Electronic Payments Popular in Australia, but Need to Be Faster

Australians for decades have been using the EFTPOS direct-debit system to make payments at most outlets. Though popular and ubiquitous, EFTPOS transactions are notably slower than simple cash ones, requiring PIN entry and processing time. It’s also not available for consumer-to-consumer transactions.

Despite this acceptance, the chart in this article shows Australia at the lower end of the scale for non-cash transaction volumes. Despite a small population, a centralized financial system and the availability of advanced technology, it lags behind countries like Sweden and Denmark.

Most media articles promoting instant cashless payment systems focus on convenience, the cumbersome and vintage nature of exchanging physical cash, and cost-savings. Crime is another popular argument for reducing cash in general — with tax evasion, money laundering and drug transactions the main targets.

Even where going 100% cash-free is not possible, abolishing large-denomination bills could prevent large transactions taking place in anonymous currency, they say.

The ABC report says cash transactions in the “black economy” costs Australia between $3.5 and $5 billion (AUD) per year in tax revenue. Some businesses have been known to offer discounts for cash payments for this reason.

Would Going Cashless Solve Government’s Revenue Problem?

The question remains: were physical cash to disappear, would all these transactions have no choice but to flow through the “official” economy, giving the government its rightful billions? Or would people find some other way to store and exchange value?

Cryptocurrencies like bitcoin offer one more anonymous alternative. Though even in a bitcoin-based economy, people would still have a need to exchange it for national fiat currency for some payments (e.g.: most payments to the government itself, like taxes and fees). The same goes for any other portable store of value, like precious metal coins or diamonds.

Crime aside, opponents to a cashless world argue that digital transaction networks facilitate even more surveillance and less privacy. With no ability to withdraw cash from banks under any circumstances, the government would have almost complete control over personal finances. Ordinary people who have never lived through a major banking crisis may not understand the implications of this control.

Is a cashless society a bonus for bitcoin, or will it make no difference? Let’s hear your thoughts.

Image via Pixabay

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