Despite the arrival of a new mPayments/mBanking/mCommerce system somewhere in the world every week, reports indicate that their success may be challenged, even derailed, by a potent and previously underestimated force – â€˜greyâ€™ power!
The â€˜greyâ€™ adjective presumably describes the hair color of the aging and often retired community sector that hasnâ€™t quite taken to everything beginning with â€˜mâ€™, or â€˜iâ€™ for that matter. This end of the market has a penchant for cash, folding money or â€˜real moolahâ€™ and doesnâ€™t seem to trust things virtual. Their motto – if you canâ€™t touch it, it probably doesnâ€™t exist.
OK, that might be a slight exaggeration but a story that appeared yesterday inÂ â€˜The Ageâ€™ newspaperÂ in Australia must have twigged the reporter to dig deeper and uncover aÂ daunting â€˜greyâ€™ conspiracy. It seems that Australia is bucking the trend towards becoming a â€˜cashlessâ€™ society. Our mPayments guru,Â David Birch, will be shaking at the news but there are more bank notes in circulation than ever before â€˜down under,â€™ and the number is growing.
The Reserve Bank released figures that showed holdings of bank notes (the plastic variety invented over there) had grown 7 percent in the year to June, but the population grew only 1.4 percent. As only a federal bank could do, it quoted figures that each person holds an average of seven $5 notes, up from five a decade ago, and five $10 notes, up from four. The explosive growth, however, was in the holdings of $50 notes – up from 15 per person to 23 per person – and $100 notes, up from seven per person to 10.
Those of you that have watched too many TV crime shows will automatically assume that there is a thriving criminal element, probably mob or drug-related, using cash as the preferred means of settlement, and you could be excused for thinking that. However, this is a â€˜furphyâ€™ according to a former Reserve Bank official, Peter Mair.
In a letter to the Reserve Bank governor, Mr Mair laid the blame squarely on elderly people wanting to get the pension and hiding their income in cash to ensure they qualified for the means-tested benefit. The article went on to claim that Mairâ€™s best guess was the average pensioner couple could be holding up to $50,000 in undeclared $50 and $100 notes to get access to the pension.
He based his theory on an observation from 1996, when the green plastic $100 note replaced the grey paper note, he observed regular visits from retirees wanting to withdraw large quantities of the new notes. He said the commercial banks had sent them to the Reserve because they did not have enough $100 notes on hand.
That raises another question â€“ where are they hiding all that cash? Petty thieves across the nation are probably casing homes of known â€˜greysâ€™ as you read. Is the money hidden under the mattress, in the biscuit jar, the attic, the shed? Itâ€™s plastic so it may even be buried in the yard. Will this trigger a series of dawn raids by fraud squads and dogs trained to sniff out illicit hoards of cash. Pensioners will be too frightened to venture out in case they are scorned by other law-abiding members of society.
No doubt the tax authorities are even more concerned that this criminal element is paying tradesmen in cash thus avoiding GST. What used to be known as â€˜black moneyâ€™ has suddenly become â€˜grey moneyâ€™ and â€˜grey marketâ€™ has taken on a whole new meaning. Will you even be able to look at your grandparents in the eye again?
This news may change the very fabric of society and may put the digital economy in jeopardy. Letâ€™s hope Australia is able to clear up this mess, put all those criminals behind bars and set an example for the rest of the world â€“Â donâ€™t mess with our cashless ambitions!
First published at TM Forum asÂ The Insider, 25 September, 2012