Cheque’s no longer in the mail … but $100 note is under the mattress

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COVID-19 has accelerated the death of cheques and ATM withdrawals as pandemic restrictions change the way we pay for our goods and services.

But the fear of economic downturn has also driven a surge in the number of $100 and $50 notes stashed away under mattresses and in shoe boxes across the country, with a record amount of cash now in circulation.

Data from the Reserve Bank shows how consumer purchasing trends have been changed by the pandemic, which has accelerated the use of technologies such as tap-and-go and direct debit as people make purchases from their home offices.

In August this year, just 719,000 personal cheques were drawn by Australians, the smallest number since the RBA started collecting figures.

Since February last year, before the country’s first lockdowns to stop the spread of coronavirus, the number of personal cheques has fallen by 39 per cent. It continues a pre-COVID-19 trend as Australia approaches the end of cheques in the mail with the payment system down by 86 per cent over the past decade.

While the RBA has been openly talking about the eventual end of the cheque system, COVID-19 has also changed our attitudes towards cash.

In February last year, more than $10.2 billion in cash was withdrawn from ATMs nationwide but by August this year, that had fallen by almost $3 billion to a record low of $7.3 billion.

While the value of withdrawals has fallen 28 per cent, the number of transactions has dropped by 43 per cent in a sign that when people do use an ATM, they are taking out a large amount of cash.

The cash, however, is not going through the nation’s shops.

The number of $100 and $50 notes in the economy has reached an all-time high. Since COVID-19, the value of $100 notes has jumped by $6.6 billion or 17.5 per cent while the value of $50 notes in circulation has climbed by almost 24 per cent or $9.3 billion.

But $5 and $10 notes continue to fall in number and value.

While cash withdrawals from ATMs fall, the number of $100 and $50 notes in the economy is growing.Credit:Louise Kennerley

CommSec chief equities economist Craig James said two different changes were occurring across the payment system.

He said while there had been a lift in large denomination notes, they were not moving around the economy.

“There’s plenty of $50 or $100 notes stashed in mattresses or other parts of the house. When people are unsettled or worried about the economy, they hold those big notes,” he said.

“People might have $10 or $20 as an emergency in their wallet, but that’s about it now.”

While cheque numbers continue to fall, the value of those cheques has not fallen by as much.

Mr James said the strength of the property market may account for higher value cheques still remaining in use for some Australians.

RBA governor Philip Lowe said this year that at some point in the future it would be in the national interest to close down the cheque system. He noted that any change would likely be technologically driven.

Private cryptocurrencies remain the focus of investors while the RBA is looking into a central bank digital currency.

Mr James said it may take some time for cheques to disappear.

“There’s been plenty of talk about the death of cheques and cash, but they keep hanging on. Whether the next generation does is another story,” he said.

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