Australia’s banks could soon start ‘cash rationing’ at ATMs, a financial expert predicts – a move that could result in customers being banned from withdrawing banknotes from other institutions.
The country’s largest banks are increasingly moving away from cash, with just 16 percent of personal transactions in Australia being made in cash by 2022, according to a Reserve Bank survey.
Macquarie Bank announced on Thursday that it would stop offering physical withdrawals at its branches from January 2024. It comes shortly after ANZ banned ATM withdrawals at most branches earlier this year.
On Thursday, financial expert Sarah Wells told Daily Mail Australia that banks could introduce ‘cash rationing’ in the future due to lower demand for banknotes.
With cash rationing, banks only keep limited amounts of physical cash in ATMs.
Ms Wells predicted this could lead to the introduction of cash withdrawal limits. She suggested that customers could even be restricted from withdrawing money from other banks’ ATMs.
Financial expert Sarah Wells predicted that cash rationing would occur at ATMs as banks increasingly phased out cash transactions
Ms Wells said: ‘There is a possibility that if we reduce the demand for cash, or reduce the availability of cash, there will be limited amounts of actual, physical cash held.’
Ms Wells said consumers could soon be limited to withdrawing only cash from the machines their bank owned.
“If there isn’t that much cash, you might only be able to withdraw a certain amount, and then they prioritize their customers over other customers accessing their ATM,” she said.
Peter Tulip, who was senior research manager at the Reserve Bank from 2011 to 2020, said ING’s online-only approach to banking could become more common in Australia.
‘It will be strange if a bank does not do cash transactions. That was one of their most important functions,” he told Daily Mail Australia.
‘The trend is away from cash; many of these financial transactions are all moving to the internet.
“There are certainly financial institutions that are completely online, and many of our transactions no longer require face-to-face interaction with a bank employee.”
Ms Wells predicts that the country’s major banks will run out of cash by 2026. “We’re well on our way there,” she said.
She predicted the federal government would have to step in and allow Australia Post to act like a bank that allowed its tellers to hand over cash.
Australian banks could start rationing cash at their ATMs so the small minority of customers who still use banknotes can access their money, a financial expert says.
This would make the Postal Service behave like a government-owned bank, as the Commonwealth Bank was from 1911 to 1991, until it was gradually privatized.
Older scam victims and the inability of domestic violence victims to escape abuse without their spouse tracking them down highlight the shortcomings of a cashless society, she said.
“It takes a media story for a woman trying to get out of a bad situation and not being able to do anything because it all has to be done online,” Ms Wells said.
“It takes such a horrific story, or an elderly person losing their entire life savings because they were forced into an online system.
“You 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 taking institution, behind the Commonwealth, Westpac, NAB and ANZ – has announced it will be ‘phasing out our cash and check services across all Macquarie banking and wealth management products’ from January to November next year.
The Commonwealth Bank and ANZ have halted cash withdrawals at some of their inner city branches, but Macquarie is the first major player to announce it would ban cash tellers at all branches from handling notes.
Cash-only transactions will not be available at branches including Commonwealth Bank Place in central Sydney, as well as nearby South Eveleigh, Barangaroo, Penrith and University of Sydney, which the bank is now calling “specialty centres”.
Daily Mail Australia also understands that some ‘specialist centre’ branches in Brisbane and Melbourne will no longer allow cash withdrawals and deposits without a prescription.
The old Commercial Banking Company installed Australia’s first automated teller machine in 1969, but ATMs could soon become a relic of the past even before checks are phased out in 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 the elderly were turning away from cash.
“The demographic groups that have traditionally been more likely to use cash for payments – such as the elderly, those with lower incomes and those in regional areas – saw the biggest declines in cash use,” the report said.