If you are looking for a gift this coming summer, here is a present we do not suggest: a wallet or a purse. One day soon, carrying physical money will be a very unusual thing to do.

FIS Global recently released a report into how people pay for things in 41 countries across the globe, including Australia. The pandemic in 2020 accelerated a long-term trend away from using actual cash towards various types of electronic payment. This was a worldwide trend, of course, with the percentage of transactions using cash dropping enormously. In 2019, cash accounted for just over 30% of POS transactions across the countries being examined. In 2020, that percentage fell to just 20.5%.

The researchers put their crystal balls into use and estimated that, by 2024, just 12% of total POS transactions will be in cash across the countries examined.

Interestingly, the drop in the use of cash was lower in Australia than in other countries. Here, the use of cash fell by less than 10% during 2020, compared to the average drop of 32% across the 41 countries. That said, we Aussies were using little cash to start with, and so only 8% of Australian POS payments used cash during 2020.

This leads to a really interesting question: of all the money in the world, how much is actual physical coins and notes? Physical notes and coins are more formally known as the ‘money base.’ In 2018, the money base in Australia represented just 6% of total GDP, as shown in the following table from the Reserve Bank of Australia:

The bottom figure, of $109 billion, is part of the figure just above it of $2,096 Billion, which is basically total money. So, in July 2018, physical currency accounted for just over 5% of all the money in Australia. Almost all Australian money is electronic in some form or another.

Now, here is something that we found even more interesting. During 2020, although people used less cash to buy things, demand for having that cash actually rose. Here is how the RBA shows the demand for new banknotes:

Before the pandemic, most of the new banknotes that were created simply replaced old notes that needed to be withdrawn from circulation – the total growth in banknotes was only just above 0%. But the demand for new notes in 2020 caused the number of notes in circulation to soar by more than 15%. This was the highest rise since the GFC in 2007-9, which points to the reason for the spike: in times of crisis, (some) people lose faith in electronic money, such as bank deposits, and use physical currency to store their wealth.

This is shown further by the types of banknotes that people were demanding. It was the big notes, demand for which rose by more than 20%:

So, people are getting hold of more $100 dollar notes but actually spending fewer of them at the shops. These people won’t need a wallet or a purse for Christmas. They’ll need a wall safe.