A major glitch in the Commonwealth bank’s app has highlighted the dangers of an increasingly cashless society, experts warn.
People were paralyzed by the technical glitch on Monday and unable to access their accounts, transfer money online or use their cards to make purchases.
The outage sparked a deluge of angry calls and social media posts from concerned customers wanting to know why they couldn’t use the bank’s services, including some ATMs.
The bank is tight-lipped about the cause of the outage and says an investigation has been launched into the matter, with many customers regaining access to their accounts by mid-afternoon.
Lance Blockley, independent payments market expert, estimated that by 2025, traditional cash would account for less than 4 percent of total retail purchases nationwide
Experts have warned of the dangers of an increasingly moneyless society, including fears for privacy and security, in addition to making life more difficult for the elderly who are likely to be less tech-savvy
Now experts have argued that the troubling Commonwealth bank episode is an insight into what can go wrong when people rely too much on online banking instead of old-fashioned cash.
Cybersecurity expert Ben Britton, who works as Chief Information Security Officer, told Daily Mail Australia that such events exposed the vulnerabilities of over-reliance on digital payments.
“If there’s no internet, there’s no transactions, there’s no access to your money,” he said.
“But if you have your money in your hand, or in your pocket, there can be no electricity and you can still make payments to people.”
“The major weakness of the system is that it depends on the Internet, Internet security and individual device security.
“While no one can remotely access the money in your pocket.”
There are also major security issues with online banking.
Often, scammers can pose as banks and catch unaware customers off guard and convince them to transfer large sums of money in an instant.
An Australian businessman was recently scammed out of $130,000 in a sophisticated text messaging scam after a fraudster messaged him from the same number used by his bank.
It comes after research published in January found that physical money will all but disappear from circulation within a decade.
Lance Blockley, an independent payments expert, estimated that by 2025, traditional cash would make up less than 4 percent of total retail purchases nationwide.
Mr Blockley, managing director of consultancy The Initiatives Group, said in a contribution to the ACCC in 2021 that banknotes for all uses, not just retail, would reach 10.2 per cent by 2025, up from 24.2 per cent in 2019.
Millions of Commonwealth Bank users were unable to access internet banking with NetBank on Monday
Card transactions – including tap-and-go and machine insertion – still make up three quarters of transactions (stock image)
But Britton said online transactions have opened up new frontiers for criminals in terms of the number of people they can target and the huge sums of money they can steal.
“If you look at cybercriminal organizations or individuals who are cybercriminals who want to rob a large number of people, they can rob millions of dollars from tens of thousands of people in a single day,” he said.
‘It wouldn’t be possible to do that on the street and rob individual citizens of their cash.’
Mr Britton said many criminals have stopped selling drugs but are turning to online fraud because it is much more profitable and the chances of being caught are much lower.
‘The old system, coins and physical money, has worked for thousands of years. It has its problems no doubt, but we know what they are,” he said.
“But when you look at the digital world, there are so many unknown problems that we haven’t even encountered yet.”
Another drawback of a cashless society is the lack of privacy. When you pay for something digitally, it leaves a digital footprint, which can be verified by banks.
Banks are often affected by data breaches, whether through hacking or errors, exposing customers’ data to criminals.
In November, the data of 9.7 million current and former Medibnak customers was exposed in a major data breach when an unnamed group hacked into the health insurance company’s system.
A cashless society also effectively excludes many elderly people, who have always used physical currency and are likely to be less tech savvy.
National Seniors Australia’s lead attorney, Ian Henschke, told Daily Mail Australia that the decline in cash use was “undoubtedly accelerated by COVID-19.”
“While we understand that the transition to a more cashless society – and closely related to it – phasing out checks, closing ATMs and banks is part of progress, these decisions need to be made with seniors in mind,” he cautioned.
“Some seniors may not feel comfortable banking or doing business online because they are not tech savvy, afraid of possible online scams, cash is what they have always known and they have no other way to make financial transactions.
Cash is still a valid means of payment. And as we’ve seen before, online banking or doing business online can bring problems and risks.’
Cash transactions are dying out in Australia with just 13 per cent of purchases made with notes or coins – making a cyber hack a real threat to everyday life as more and more people use cards and mobile payment methods (pictured is a signboard in Sydney)
Such a move could also leave rural communities vulnerable due to poor broadband and mobile connectivity.
Some have also argued that a shift away from cash payments is making it harder for struggling families to budget, as it’s easier to lose track of spending if it’s not tangible currency you can see in your purse or wallet .
Also, many credit card and mobile payments incur processing fees, which can limit the profit margins of smaller, independent businesses. In many cases, these costs are passed on to the consumer.
A Brisbane mom recently shared a simple explanation of why notes were superior to digital payments on social media where it went viral.
Fiona Edmunds showed that physical money retains its value no matter how often it is used.
However when you use a bank card part of the money is invariably eaten up by fees, which the retailers have to pay.
The Reserve Bank estimated that only 13 percent of transactions were in cash by the end of 2022, a halving in just three years since the start of the pandemic.
Ellis Connolly, the RBA’s head of payments policy, said resources were being deployed to protect the resilience of electronic payments — and mentioned the word “security” six times in a speech in March this year.
“Australians rely more than ever on electronic payments, so our retail payment systems need to be secure and resilient,” he told The Australian Financial Review Banking Summit on Tuesday.
He added, “The dominance of cards and the consumer shift to mobile devices raises a number of important issues within the RBA’s mandate.”
Commonwealth customers were outraged by Monday’s outage, prompting them to receive the message, “Sorry, something went wrong.”
“Unable to make payments, unable to transfer money to Commonwealth Bank,” one angry person wrote.
“Did you lay off your entire Australian IT department to pay the CEO’s salary?”
A mother of three from Brisbane shared an elegantly simple explanation of why cash is superior to paying by card
Last year, Commonwealth Bank chief Matt Comyn received a 35 percent pay rise $6.97 million.
His pay package is 77 times higher than the average full-time salary of $90,917 in Australia.
Another customer said, “What does it take for people to realize that it’s a really bad and bad idea to make their financial security completely dependent on internet banking?”
The problem of a society getting less and less money was perfectly articulated by Melbourne’s Julie Christensen, who said cash “makes life easier” and urged authorities not to restrict its use.
“My $50 bill can’t be hacked. If I get robbed, I lose $50, not all of my savings. If my $50 bill is accidentally submerged in water, it will still work,” she wrote in a letter to Nine Newspapers.
“My $50 bill doesn’t need batteries, it can’t be ″out of reach″ and it won’t break if dropped. If the system goes down, I can still use my note. My $50 note can be put in a charity box or given to a homeless person.”