Cash is gradually being replaced by debit cards, although it is likely to hang on for quite a while yet in many places. Debit cards have a number of advantages over cash.  We can use them on our phone, our watch or even wear them as a payment ring.  Debit cards can also be used abroad far more easily and more conveniently.

The writing has been on the wall for a while now that debit cards are gradually replacing cash as the preferred way of paying for things. According to the Reserve Bank of Australia, roughly 75% of card payments were made with a debit card over the 2020/21 period. This is compared to around 60% 10 years ago.

The COVID-19 pandemic has helped to accelerate the shift away from cash too. Many people avoided handling physical money and opted for contactless payments instead in fear of coming into contact with the virus. The Australian Banking Association (ABA) reported that cash withdrawals fell by 10 per cent in 2020, while debit card use rose by 17 per cent in the same period.

Some advantages debit cards have over cash

If a card holder loses cash then they are highly unlikely to get that money back, unless it is handed in and the person can prove that the cash is theirs.  If their card goes missing then they can get their card stopped and so the card user can lose far less than they would if they used cash.  If this is returned in time then they can benefit from a zero liability guarantee.

A zero liability guarantee is a policy that both VISA and MasterCard have to limit the liability that the card holder has for unauthorised transactions.  If the card holder has not had any part in the unauthorised transaction (for example by giving the card to the person who used it in a fraudulent way) and lets the card holder know that they have lost it in good time then there will be no liability arising from the unauthorised transaction.

There is also a benefit when people travel, as debit cards can be used in such a way that they can pay in the currency used by the country they are in, but still be billed in the currency of the bank account holder.  As debit cards are generally accepted worldwide, this means that with both VISA and MasterCard there are over 40 million shops and service providers that will accept these debit cards according to MyBankTracker.

As well as being able to be used overseas, a debit card can be used for online, telephone, and old fashioned mail ordering.  This is clearly impossible with cash.  This is particularly an issue with online transactions that are getting smaller and smaller over time.  Debit cards on the other hand can be used very conveniently online. Debit cards will not totally replace cash, particularly for smaller transactions.  Cash also has the value of anonymity as many people do not like the idea that debit cards track their expenditure, which cash cannot.

Debit cards and the future

As the number of debit cards being used in Australia is expected to continue increasing in the coming years, more people are adopting digital payment methods and new technologies will emerge. Statista forecasts that the number of debit cards in use in Australia will reach 45.35 million by 2028, up from 44.45 million in 2023. Debit cards are likely to remain a popular and convenient way of paying for everyday items, as well as letting us access cash when needed.