Cash disappears as COVID-19 drives contactless spending worldwide

When the World Health Organisation first warned that handling banknotes could spread the SARS-CoV-2 virus, the warning sounded almost quaint. Yet within months, retailers across Sydney, Melbourne, and regional centres like Geelong and Hobart had quietly removed cash from the checkout equation. Customers who had once fumbled for coins at the milk bar, the bottle-o, or the local servo were suddenly waving phones and plastic at card terminals. The COVID-19 pandemic did not invent the cashless society, but it shoved it forward by what economists now believe was five to seven years, reshaping behaviour in shopping strips across the country.

The shift had been creeping along for decades. Australia was already an outlier in the OECD for low cash usage, and the Reserve Bank had tracked the decline of banknotes through the 2010s. What changed in 2020 was speed. Fears about surface contamination, government restrictions on cash handling in hospitality venues, and the rise of QR-code ordering fused into a single behavioural rewrite. The result was a payments landscape where, for many Australians under 40, holding physical money became the exception rather than the rule, and a five-dollar note stopped feeling like the go-to answer for a snappy purchase.

How the pandemic rewired habits at the till

The first outbreaks produced a measurable spike in contactless transactions in Australia. Major banks reported tap-and-go volumes rising by roughly 40 percent year-on-year between March and June 2020, while ATM withdrawals at CBA, Westpac, NAB, and ANZ branches fell to historic lows. Cafés that had insisted on cash-only at the counter — a familiar scene in inner-city Melbourne and Fitzroy — flipped to card-only or closed their tills entirely.

Public-health messaging reinforced the change. The WHO advised washing hands after handling cash, and although the official stance softened later, the early public perception stuck. Many hospitality venues posted stickers reading "EFTPOS only" or "contactless preferred" at the front door. Even the local fish and chip shop in places like Fremantle or Newtown adapted overnight, advertising new payment apps on sandwich-board signs out the front. For consumers, the friction of cash suddenly felt heavier, and the behavioural loops that once made notes feel normal were broken by months of lockdowns and a generation of younger Australians who had barely carried a wallet in the first place.

Australia started ahead, with tap and go already the default

The pandemic reached a country that was structurally prepared. Eftpos launched contactless support in 2014, and by 2019 more than 70 percent of in-person card transactions were already contactless. This gave local merchants, banks, and consumers a technological cushion that many European countries lacked. German retailers, for instance, remained heavily cash-reliant well into the early 2020s, and even the United Kingdom took the pandemic to lift its tap limit above £45 for the first time.

The Reserve Bank's triennial Consumer Use Survey confirmed the gap. Australians habitually used cash for only around a quarter of their in-person purchases, a figure that dropped further during the pandemic. Buy-now-pay-later providers like Afterpay and Zip Co, both Melbourne-headquartered, saw merchant sign-ups surge as small businesses scrambled for any zero-friction checkout option. The New Payments Platform behind Osko and PayID made it possible to split a brunch bill in Surry Hills or settle a tradie in Brisbane without a single banknote changing hands. Australians did not need persuading to download an app; the pandemic simply gave them permission to use what was already there.

A snapshot of cashless methods across major markets

Around the world, the same pivot played out in different forms. China's Alipay and WeChat handled surges in small-ticket daily transactions. Sweden's Swish network processed growing volumes as the country edged toward becoming fully cashless. In the United States, contactless card rollouts that had been sluggish for years accelerated as Visa and Mastercard eased tap limits. Across regions, the pandemic acted less like a single wave and more like a tide that lifted whichever digital boat was already moored at the dock.

The Australian share is underpinned by a vast network of terminals already deployed across the country. Across the OECD, the pandemic's gift to fintech was a sharp drop in the friction that had previously kept older consumers loyal to banknotes, even when high-margin add-ons like loyalty rewards were on offer.

Small businesses across Sydney and Melbourne rewired their tills

For sole traders, the pivot was harder than for the major supermarkets. Many small businesses did not have terminals that could accept contactless by default, and the closure of branches during lockdowns complicated matters. Some café owners in Newtown and Brunswick resorted to PayID-to-mobile transfers, asking customers to "shoot through" the latte price before the next round.

The Reserve Bank intervened twice during the pandemic to lower interchange and scheme fees, helping independent venues stay afloat while customers kept tapping. Buy-now-pay-later offered a workaround for higher-value items: a haircut, a mechanic's bill, a tradie's deposit could be split into instalments without a credit card. Many operators felt the relief as soon as the change took effect.

Payment innovation also bled into adjacent corners of the pandemic economy. GPs and allied health practices adopted instant billing via apps, a pattern that surfaced in coverage of the covid-19 vaccine effectiveness against hospitalization remains high rollout. The digital shift in healthcare did not stop at the vaccine queue; in rehabilitation clinics across the country, practitioners increasingly relied on tap-to-pay for insured and self-funded patients alike, smoothing out what had previously been a manual, paper-heavy back office.

Cashless exclusion and the worry for older Australians

The march toward cashless has left some communities visibly behind. People aged 65 and over were the slowest cohort to adopt mobile wallets, and community groups warned during the pandemic that card-only venues would lock some pensioners out of cafés, community halls, and weekend markets. Service stations in rural towns such as Ballarat and Tamworth retained cash lanes longer, partly by necessity and partly by social responsibility.

Charities and food banks faced their own dilemmas. Many of the people they serve do not have a bank account, a smartphone, or reliable mobile data. The Australian Banking Association ran awareness campaigns about staying safe with cash for those who needed it, and several councils allowed a small proportion of cash-only transactions at weekend markets to keep things accessible. The risk, advocacy groups warned, was that a fully carded country would simply drop the people who had always relied on notes and coins to manage tight weekly budgets.

For some medical and allied-health settings, the cashless push produced friction in unexpected places. Programs supporting chronic conditions — including newer therapies dealing with immobilising limb risks — found that not all patients could navigate phone-based billing portals, particularly when the condition itself limited fine motor control. Each wave of payment modernisation tends to leave some users trailing, even when the broader trajectory points sharply upward.

Areas where cashless adoption grew fastest during the early lockdowns:

• Inner-city Sydney and Melbourne hospitality strips
• Gold Coast tourism zones and Sunshine Coast retail precincts
• Newly built suburban shopping centres
• Subscription-based service businesses, from gyms to meal kits

Where the cashless trajectory leads from here

Looking past the immediate pandemic years, the trajectory is settling into a new normal rather than a complete disappearance of cash. The Reserve Bank's continued issuance of banknotes — and the periodic sell-outs of new $100 designs from suburban ATMs — suggests that physical money remains a useful fallback. Its share of household spending continues to shrink in surveys, especially among millennials and Gen Z, who treat cash as something for holidays rather than the weekly shop.

Several structural signs point to further acceleration. The phasing down of the 3G network has forced merchants to upgrade older terminals, dragging holdout cash-only businesses into the digital era. Digital identity frameworks such as myGovID and digital drivers' licences have set the rails for new payments experiences. The trajectory mapped by the WHO — most recently in coverage of the who chief self-quarantining after contact with person who tested positive for coronavirus — shows how minor nudges during outbreaks translate into long-run practice, including how hands touch money at the shopfront.

For Australians, the most likely future involves a wallet app rather than a leather wallet, even for the morning coffee at the local. The pandemic broke a behavioural logjam that no marketing campaign could have shifted on its own, and the country's payment stack looks set to keep moving in the same direction.

Cashless milestones the world reached during the pandemic years:

• The Reserve Bank of Australia's fee cuts in mid-2020 and again in 2021
• Sweden recording its lowest ever ATM withdrawal volume in 2021
• China's mobile-wallet share of household spending crossing 90 percent
• The United States lifting tap-to-pay limits to encourage wider contactless use