The Rise of the Cashless Economy

The idea of exchanging value for goods has been around since the stone age. Historians believe that metal objects were used as money as early as 5,000 B.C. People would trade items of need for items of value and thus, the creation of money.


However, it’s 2017. The digital economy has taken over. A very welcome and convenient evolution in the 21st century. Along with most of the world becoming digital, there are still a lot of smaller businesses that only accept cash. With many predictions expecting New Zealand to be cashless by late 2020s, it is only a matter of time before this idea becomes a reality.


Where do we stand?


NZ seem to somewhat lacking in our ability to become fully cashless, with the Reserve Bank’s head of currency, Brian Hayr, reporting that the year to June 2015 saw cash in hands of the public jump 7.6%. This doesn’t mean NZ lack the technological advancements to enable a cashless economy, but the problem could lie in human behaviour. People tend to find great comfort in the ability to have this tangible option, meaning that cash isn’t purely economic, and still plays an important role in the being a payment option.   


However, New Zealand have seen a decrease, like most economies, in the use of cash payments. Interestingly, people classified in the high socio-economic zone, are more adept to using cashless payments, and contrary to this, the lower socio-economic zone use cash significantly more. However, in both zones, they are both showing trends of a downward slope to a cashless economy.


Payments NZ released an infographic summarising the transactions made in 2010 compared to 2015 and it uncovers some interesting and affirming statistics. It showed the number of debit and credit transactions make a steady increase, but also the use of ATMs showing a small surge, meaning that Kiwi’s do still in fact value cash as an asset and payment option.


NZ Payments Infographic



How it affects SMEs


You’re probably wondering how this affects small business owners. Frankly, there’s much to consider: SMEs will have to be more mobile, meeting expectations with ease and types of payment in order to keep cash flow high and fluid. There are many solutions now available for the everyday business owner and entrepreneur, from tap-and-go hardware and software for easy card transactions through applications on devices, to small pieces of hardware sometimes used by retailers and market stands.


The move to a cashless society is not only affecting mobility and accessibility, but allows you to keep much more on top of invoicing and payments flowing in and out of your business. Being in a cashless economy means that tracking spend is a lot easier and therefore, producing financials can take half the time and be done at the click of a button. It will also be easier for businesses to analyse their spending and learn where they need to crack down on unnecessary purchases.


And let’s be honest… one of the great advantages of not having cash is emptying out those pockets full of loose change weighing you down!  


With cashless payments comes some inherent risk and certain disadvantages – as with most technology! If you lose your phone, it’s a double whammy – you’ll lose your card details too as smartphones are typically connected to your bank account, moreso with the advent of Apple Pay and Android Pay technology. Security becomes an issue when theft becomes easier and more profitable. Furthermore, there is always the possibility of New Zealand’s ageing population finding it difficult to learn these skills. Changing to a new process could be stressful or potentially problematic for these people.


On the whole, a cashless economy is a step forward for business, as it allows for an increase in efficiency and a company’s ability to adapt to customers’ payment preferences. It saves a significant amount of admin with accounting software and added functionality with the banks. We hope to be seeing this shift as a smooth and seamless process in the coming years, as more fintechs continue the charge to a cashless society.


Until next time,

The Spotcap Team.