12 June 2024Hi Cash Lovers, New Australian research strongly...

12 June 2024

Hi Cash Lovers,

New Australian research strongly suggests anyone looking to save money should carry more cash.

Cashless payments are associated with higher levels of spending, something researchers call the 'cashless effect.'

When cash is compared to any other payment method, the research data shows consumers spend more when they don't have to hand over physical notes and coins.

The cashless effect works to increase our spending by removing the 'pain of paying' - the emotional impact we feel when having to hand over physical money.

And paying with cash - with its associated pain - means we are more likely to make better spending choices - and this has direct impact on our physical health.

“Consumers are more likely to buy unhealthy food products when they pay by credit card than when they pay in cash,” reported Manoj Thomas, Kalpesh Kaushik Desai and Satheeshkumar Seenivasan in Oxford University’s Journal of Consumer Research back in 2010.

“Results from four studies support these hypotheses. Analysis of actual shopping behaviour of 1,000 households over a period of 6 months revealed that shopping baskets have a larger proportion of food items rated as impulsive and unhealthy when shoppers use credit or debit cards to pay for the purchases.”

Most of the research compares cash payments with credit and debit card payments. Contactless payments (like Tap and Go) have decreased the pain of paying even further, presumably increasing the likelihood of consumers making unhealthy choices says American researcher Dr Utpal Dholakia.

“It’s easy to imagine that because these methods [contactless payments] make spending money even more painless [than card payments], they’re encouraging shoppers to buy impulsively, over-spend, and purchase unhealthy products even more.”

I personally lost weight when I switched from tapping my phone to paying with cash.

So paying with cash:

1) Makes budgeting easier - you can only spend what you have in your purse. If you want to spend more you need to go and get more cash. You can set your daily budget in the morning and stick to it.

2) Retains the pain of paying - the emotional feeling you have about losing a tangible and valuable physical banknote - so you're likely to spend less.

3) Improves your healthy choices - paying with cash means your less likely to make impulsive unhealthy spending choices.

On top of all this, cash helps us retain our privacy, avoid payment surcharges and doesn't suffer from 'system outages.'

Right now the industry, regulators and government are talking about the future of cash.

There is an independent bill before parliament proposing to make cash acceptance mandatory for all retailers. The bill's notes explain:

"The Bill mandates that businesses providing goods and services in face-to-face settings, within a premises, structure or vehicle at which a person carries on a business, must offer to accept, and must accept, payment in cash if the transaction does not exceed $10,000.

The Bill provides for maximum civil penalties of $5,000 for a person and $25,000 for a body corporate if its requirements are contravened."

A senate committee has just recommended that banks be required to ensure access to cash in every town and suburb. Recommendation One says:

"The committee recommends that the Australian Government adopt a policy recognising access to financial services as an essential service. To this end, it should commit to guaranteeing reasonable access to cash and financial services for all Australians."

This recommendation is clearly very close to what our petition has been calling for. As a reminder, this is what our petition states:

We call for an Australian Banking and Cash Guarantee that includes these rights:

1) All Australians must be able to have reasonable local access to cash and full banking services.

2) All Australians must be able to choose cash when paying for food and essentials at physical retailers.