When a CrowdStrike update caused millions of Microsoft systems to crash around the world in July 2024, many started questioning our heavy reliance on digital banking.

Daily life was disrupted — businesses and governments that couldn’t accept cash as an alternative payment, had to shut down entirely.

Airlines, airports, banks, hospitals and retailers came to a standstill worldwide.

The system outages, as many pro-cash campaigners argued, underline the risk of moving to a cashless world.

Assistant Treasurer Stephen Jones agrees that cash provides an essential fallback when digital payments break down.

“Sometimes systems go down, sometimes electronic payment systems don’t work,” he says.

The assistant treasurer says that’s a big part of why, in November, the federal government mandated cash for essential purchases, such as groceries and fuel.

“We wanted to ensure all Australians — one-and-a-half-million Australians who prefer to use cash — are able to do that,” Mr Jones tells ABC News.

Treasury has already started consulting on which businesses supplying essential goods and services should be covered by the mandate.

Mr Jones says Treasury is considering carving out small businesses with an annual turnover of less than $10 million.

Final details of the mandate will be announced later in 2025, and it is expected to take effect on January 1, 2026.

Cash transactions have declined as more people go digital

Cash use in Australia has been declining but isn’t out of vogue just yet.

According to the Reserve Bank of Australia (RBA), in 2007, 69 per cent of Australians said they would use cash to transact.

By 2014, his had fallen to 47 per cent. By 2019 it dropped to 27 per cent and by 2022, only 13 per cent.

Yousuf Qureshi has been selling carpets for 23 years and has seen this big shift in consumer preferences, but says for older people coming to his store to buy an exotic rug, cash is still king.

“They’re saving their money, and when they’re saving enough, they come by the [store],” he says.

“Sometimes they buy [carpets as gifts for] their grandson or granddaughter … they want to pay cash for them.”

Mr Qureshi says in the early days of running his business, the split between those using cash versus debit or credit cards was roughly 50/50.

Today, 90 per cent of customers use debit or credit cards to make purchases at his store in Preston in Melbourne’s north-east.

Older users, migrants and people in regions still like paying with cash

RBA data shows older survey participants were the highest cash users, with 18 per cent of respondents aged 65 and above classified as high cash users.

By contrast, only 3 per cent of those under the age of 50 were high cash users. About 82 per cent were low cash users.

Kim Nguyen sees this trend at play.

She works at a butcher in Preston Markets in Melbourne and says 30 to 40 per cent of their customers — typically older people and migrants — still prefer to pay with cash.

Mr Jones says there’s also a strong preference for cash in regional Australia, “where telecommunications networks aren’t as good as they are within the cities”.

“We want to ensure that we have banking inclusion, that we have financial inclusion, and that those communities who feel strongly about using cash aren’t excluded from the economy.”

Fewer bank branches but $9b withdrawn from ATMs each month

While there are fewer bank branches and ATMs, there’s still almost $9 billion in cash withdrawn from ATMs every single month.

Cash Welcome founder Jason Bryce says there’s been 1 million ATM withdrawals made in Australia every day over the past two years.

He notes that the RBA has said the latest Consumer Payments Survey (showing 13 per cent of transactions are cash) was affected by COVID.

The RBA will be updating its Consumer Payments Survey in 2025 and releasing that information publicly in 2026.

The Reserve Bank has noted in other research that there are more than 2 billion banknotes on issue, worth more than $100 billion — that’s about $4,000 a person in Australia.

Mr Bryce says people want access to physical currency and he’s calling on banks to respond to consumer demand.

He points out that cash withdrawals have remained steady, despite banks dismantling half of their cash distribution network.

Data from banking regulator APRA and the Australian Payments Network shows the number of bank-owned branches and bank-owned ATMs has more than halved in seven years to June 30, 2024, from 19,508 to 8,836.

Cheques are being phased out

The Albanese government has also confirmed that cheques will stop being issued by June 30, 2028, and will stop being accepted on September 30, 2029.

Brad Kelly is the co-founder of a group called the Independent Payments Forum, which draws its members from professionals in the payments industry who lobby on issues such as access to cash and fees on digital transactions.

Mr Kelly says there are still businesses including legal and real estate industries that need cheques.

The assistant treasurer says that’s being worked through now.

He notes that cheque use has dropped 90 per cent in the past 10 years and many banks and financial institutions are ending cheque issuance for new customers.

“There are lots of areas where cheques remain a means of exchange or a backup means of exchange, which is why we’ve given plenty of notice — three years’ notice for the phase-out period,” Mr Jones explains.

“We didn’t want to see ourselves in a situation … where the banks unilaterally withdrew chequing services, which left all of those businesses and industries which relied on them high and dry.”

Consumers slugged with surcharges when they ‘tap and go’

RBA data shows card payments, especially debit cards, have continued to soar, becoming the dominant form of payment in Australia.

In 2007, 26 per cent of Australians used debit or credit cards to transact.

By 2022, card payments accounted for 76 per cent of all payments in Australia.

Debit cards now account for half of all payments.

But the cost of the convenience of being able to “tap and go” has risen.

The Albanese government has said it is prepared to ban surcharges for using a debit card from 2026, pending the findings of the RBA review.

The RBA estimates that Australians have been losing about $1 billion in surcharges a year and has said its payments system review will closely examine card surcharges, which retailers pass onto consumers at the point of sale.

Big Four bank Westpac has called for an unwinding of the “blended” pricing structures that push retailers to impose surcharges on everyday debit card users, who wear the cost of paying for airline points and other benefits promoted by credit card schemes.

The assistant treasurer tells ABC News he thinks the model suggested by Westpac makes sense and the RBA review could recommend separating surcharges so debit attracts no fee.

Mr Jones says the RBA was looking at options to ensure the surcharge burden doesn’t fall on small businesses.

Payments expert Mr Kelly notes that sometimes small businesses get charged a $2 merchant fee, which the bank has paid only a few cents for, and it’s not fair to pass on that inflated cost small business.

Will there be a future cost for using cash?

There’s long been talk of whether we are headed for a cashless world, with the former Coalition government proposing to ban cash transactions over $10,000.

While that controversial bill was abandoned, the future of cash depends on several factors.

The question of whether will users one day have to pay for the benefit of using cash sounds far fetched, but is one RBA governor Michele Bullock has recently contemplated.

It’s also uncertain whether cash will still be readily available at retail stores if the companies that transport it threaten to halt taking cash to the bank.

Australia’s last remaining cash transport company, Armaguard, has repeatedly talked of how the company is struggling to stay afloat.

After threatening to stop transporting cash, the company got a $50 million bailout from its eight largest customers, including banks.

As these big issues are being pondered, small business owners like Mr Qureshi are adapting to customer preferences — whether that’s cash or card.

“Sometimes they say, ‘Oh, can you … give me some discount for cash.’ So as business policy, we tell them, ‘Yes, don’t worry. You give me the cash. We [will] give you the extra discount.’ They prefer [to use] cash when we tell them that.”

And for those who still want to pay by debit or credit but get agitated with extra surcharges imposed, Mr Qureshi says he will instead throw in a gift.

“They [get a] bit upset, so [to] make them happy, [I] give some $10-20 bath mat.”