Pablo & Rusty’s is a successful, Sydney based coffee roaster. They have recently opened a new location in Brisbane where they are trialling something different: they do not take cash.
The only accepted payment methods are credit cards, phones or smart coffee cups —yes, those colourful cups with a chip that are springing at coffee shops everywhere.
Wait, no cash at all? Isn’t that illegal?
After all, Australian notes have printed— in very small font — ‘This Australian note is legal tender throughout Australia and its territories’.
So, don’t they have to accept them?
Well, not really. Take a look at this snippet from the RBA’s website:
‘However although transactions are to be in Australian currency unless otherwise agreed or specified, and Australian currency has legal tender status, Australian banknotes and coins do not necessarily have to be used in transactions and refusal to accept payment in legal tender banknotes and coins is not unlawful.’
So, at Pablo & Rusty’s coffee shop in Brisbane, your cash is not even worth the polymer material it is printed on.
And I suspect more retailers will start to follow the coffee shop’s initiative. After all, there are many benefits to not having cash at the premises as Pablo & Rusty’s founder and MD, Saxon Wright told Gizmodo:
‘Your insurance premiums go down, cash handling errors go down, risk of theft goes down, the time it takes to cash off and go to the bank at the end of the day is eliminated.’
Retailers are not the only ones following this trend. Cash is becoming less common in the world. And whole countries are actually moving towards eliminating cash.
Sweden, Switzerland and Finland are aiming to put an end to cash by 2025, to fight criminal activity and fraud.
According to The Guardian, cash transactions in Sweden make up 2% of the value of all payments made last year. They are in track to become a cashless society in five years.
Yet going cashless does not decrease the chance of getting robbed. In Sweden, electronic and credit card fraud have almost doubled in the last decade.
The Latin American country Ecuador is also making the move to cashless. You see, the informal economy in this country makes up about 50% of its GDP. That’s a lot of money the government is missing out on!
President, Rafael Correa, wanted to become a pioneer in this area. So last year, Ecuador was the first country to launch a completely digital currency — fully controlled by the government.
Yet they run into a small problem. 40% of the population does not have a bank account. They solved it by implementing phone based electronic payments. You see, 100% of the population does have a phone.
In Australia, over half of the transactions are now cashless. And research from Westpac reveals that Australians believe the country will become a cashless society by 2022.
But Denmark is by far leading the pack. From 1 January 2016, gas stations, cafes, restaurants and clothing stores can refuse cash payments. And they will be banning cash completely by 2030.
We are moving fast towards a cashless society, fuelled by our love for convenience. After all, it is easier to get rid of money when you don’t even see it. One tap from your card, phone — or coffee lid — and its gone. You don’t even need to think about it.
Physical money is becoming a species in extinction. And our kids and grandkids will most likely have no understanding of money and how to spend it.
Moving to digital currencies will mean that governments and banks will be interlinked. They will have more control over the economy and people. Privacy will be non-existent.
Digital money will also be easier to manipulate. Printing money, negative interest rates, fees, bail-ins and deposit freezes will be simpler to implement. After all, you will have no choice but to have all your money in the bank.
And savings outside the system will be nearly impossible. Unless you hold physical gold or silver.
The end of cash is nearing. And this means putting complete faith in the banking system. Are you ready to trust them after the 2008 debacle?
For The Daily Reckoning