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New Zealand unlikely to go cashless

Categories : Cash connects people, Cash is the first step of financial inclusion
February 15, 2017
Tags : Cash, Cashless, New Zealand, Unbanked, Usage
New Zealand identified the benefits of having access to multiple payment methods, including cash, and will therefore not switch to cashless anytime soon.
Communication Team / Equipo de Comunicación

New Zealand is currently evaluating the economic benefits and consequences of moving to a cashless society. In a series of articles, Payments NZ – New Zealand’s authority on payment systems – listed the pros and cons of the potential demise of cash

Among the arguments advocating for digital payments, it has been argued that cash encourages crime and tax evasion. Indeed, it might seem easier to rob a cash register than to hack a digital system. Moreover, it is often argued that cash is used both in the underground economy and to finance criminal activities.

Nevertheless, a fully digitalised society has its disadvantages. First, it would exclude the unbanked and marginalized groups that have no access to conventional financial services: cash’s disappearance would leave them without a viable and accessible payment instrument. In addition, privacy and anonymity would greatly disappear in a world where every transaction is tracked at all times.

There are also fears that less competition between payment instruments could lead to higher fees for consumers, especially for low-value transactions. Finally, no system is immune from failures or cyber-attacks – and the consequences could be catastrophic without cash.

Payments NZ noticed that even if the use of banknotes slightly decreased over the past few years, the population seems to feel reassured when they have access to tangible money. The financial authority recognises that the human factor plays a significant role in the debate and that the country is unlikely to switch to cashless in the near future notably for this reason.

To read the original article, please click here.