Australia’s banks could soon start ‘cash rationing’ at ATMs, predicts a financial expert – a step that could lead to customers being banned from withdrawing banknotes from other institutions.
The country’s largest banks are increasingly moving away from cash, with only 16 per cent of face-to-face transactions in Australia in 2022 being conducted in cash, according to a Reserve Bank study.
Macquarie Bank announced on Thursday that it will no longer offer physical withdrawals from its branches from January 2024. This comes shortly after ANZ banned cash withdrawals at counters in most branches earlier this year.
Financial expert Sarah Wells told Daily Mail Australia on Thursday that banks could introduce “cash rationing” in the future due to lower demand for banknotes.
With cash rationing, banks only hold limited amounts of physical money at ATMs.
Ms Wells predicted this could lead to the introduction of limits on ATM withdrawals. Customers could even be prevented from withdrawing money from other banks’ ATMs, she suggested.
Financial expert Sarah Wells predicted that there would be cash rationing at ATMs as banks increasingly phased out cash transactions at ATMs
Ms Wells said: “There is a possibility that if we reduce the demand for cash or reduce the availability of cash, only limited amounts of actual, physical cash will be held.”
Ms Wells said consumers could soon be limited to withdrawing cash only from ATMs owned by their bank.
“If there isn’t that much cash, there’s a chance you can only withdraw a certain amount and then your customers will have priority over other customers accessing their ATM,” she said.
Peter Tulip, who served as a senior research manager at the Reserve Bank from 2011 to 2020, said ING’s online-only approach to banking could become more widespread in Australia.
“It will be strange if a bank doesn’t do cash transactions, that was one of its main functions,” he told Daily Mail Australia.
“The trend is moving away from cash – many of these financial transactions are all moving online.”
“There are certainly financial institutions that are transacting entirely online, and many of our transactions no longer require face-to-face interaction with a bank representative.”
Ms Wells predicts the country’s major banks will be cashless by 2026. “We are well on the way there,” she said.
She assumed the federal government would have to step in and allow Australia Post to act like a bank, allowing its tellers to hand out cash.
Australia’s banks could begin “cash rationing” at their ATMs so that the small minority of customers who still use banknotes can access their money, a financial expert says.
This would make the Post Office behave like a state-owned bank, as the Commonwealth Bank was from 1911 to 1991 until it was gradually privatized.
Elderly victims of fraud and the inability of domestic violence victims to escape abuse without their spouses tracking them down highlight the shortcomings of a cashless society, she said.
“For a woman trying to get out of a bad situation and not being able to do anything because everything has to be done online, she needs a media report,” Ms. Wells said.
“It takes a horrific story like this, or an elderly person experiencing the loss of their entire savings because they were forced into an online system.”
“They need to have an option available or Australia Post steps in – there needs to be something available for people if they need access to cash.”
Macquarie – Australia’s fifth largest authorized deposit taker after the Commonwealth, Westpac, NAB and ANZ – has announced it will “phase out our cash and checking services across all Macquarie banking and wealth management products” from January to November next year.
The Commonwealth Bank and ANZ have stopped cash withdrawals at some of their inner-city branches, but Macquarie is the first major player to announce it will ban cashiers at all branches from handling banknotes.
Cash transactions are not possible at branches such as Commonwealth Bank Place in central Sydney, as well as nearby South Eveleigh, Barangaroo, Penrith and University of Sydney branches, which the bank now refers to as “specialty centres”.
Daily Mail Australia also understands that some “specialty center” branches in Brisbane and Melbourne will no longer allow over-the-counter cash withdrawals and deposits.
The old Commercial Banking Company installed Australia’s first ATM in 1969, but ATMs could soon become a thing of the past, even before checks are phased out by 2030.
Treasurer Jim Chalmers announced in June that checks would disappear “no later than 2030.”
The Reserve Bank noted in its June report that even older people are turning away from cash.
“The demographic groups that traditionally used cash more frequently for payments – such as older people, people on lower incomes and people in regional areas – saw the largest declines in cash use,” it said.