For proponents of a cash-free society, the upsides are obvious given the economic inconvenience of cash coupled with the efficiency benefits of the various electronic payments options now available. For processing payment providers such as Visa and MasterCard the transition from a cash-based to a low or no cash economy is obviously a boon.

Debit and credit cards are obvious substitutes for physical currency but mobile apps are also providing new payment options including peer-to-peer payment platforms and digital wallets. Using near field communication (NFC) technology, the Apple Pay app allows iPhones and Apple Watches to be used for contactless point of sale payments.

Stall owners

Smartphones can now facilitate payments infrastructure for small and/or infrequent merchants such as market-stall owners and tradespeople. Mobile point of sale (mPOS) technology such as the Commonwealth Bank (CBA) Emmy device and Mint Payments (MNW) Mint POS allow merchants to use their phones as effective EFTPOS terminals.

In Australia, a confluence of critical factors has displaced cash as the primary form of payment including:

The drive online: The rapid uptake of online services such as banking (including bill payment) and shopping has eliminated the opportunity to use cash for many transactions.

According to NAB, the surge in online retailing means Australians spend around $20 billion a year in online shopping. The bank's latest Online Retail Sales Index shows online shopping growing at an annual rate of 10.8 per cent, outstripping traditional retail which is growing at just 3.7 per cent. With the increase in payment buttons on websites, we expect this trend to continue.

Low-value contactless card payments: Over the past few years, the time-saving convenience offered by contactless payment cards for transactions under $100 has significantly helped erode cash's ubiquity.


Cash has historically been the most prevalent form of payment for low value (under $20) payments but with fee-free contactless card payments offered by Coles and Woolworths there are fewer reasons to use cash than ever.

Although payment habits are typically difficult to break, according to the APCA Australians' uptake of contactless card payment technology, such as Visa payWave and MasterCard Pay Pass, is an "outstanding exception".

High smartphone penetration: Australia's affection for smartphones is driving a continued increase in contactless payments with consumers now able to use their mobiles for contactless payments with apps like CBA's Tap & Pay app. Deloitte has reported that Australia is the world's sixth most concentrated smartphone market.

Created opportunity

Their popularity has, and will into the future, created a considerable opportunity to leverage mobile payment technologies, including mPOS devices and the integration of payments with other platforms such as Uber. Westpac reports a 200 per cent increase in customers using smartphones to "tap and pay", reflecting that as we go cashless we are going cardless too.

In our view, innovations on the payments horizon will further undermine the appeal of cash and continue to make mobile and electronic payments more convenient. According to the Payments Council, the next frontier in payments is fully embedded payment solutions that offer even greater levels of convenience for users.

Analysis as part of MasterCard's "Cashless Journey" project categorises Australia as a country at a tipping point where "all the factors appear to be in place for a substantial move away from cash" and gives Australia an 87 per cent readiness to go cashless score.

While in some countries there are cultural factors inhibiting the move away from cash payments, Australians seem more predisposed to adopting new payment technologies with an APCA investigative study on cash observing: "Australians are historically more rapid adopters of new technology and seem very comfortable in using electronic payments."

A little over 100 years since Australia's first banknotes were issued, the nation has begun its sprint down the road towards a cash-free future.

Chris Stott is chief investment officer of Wilson Asset Management.