Crowdstrike’s botched software update that caused the recent global IT outage has led to renewed calls for plastic cards to no longer be prioritised over paper money and coins.

A recent survey by the Reserve Bank found that only 43% of us still use cash regularly. About 3.5% said they never carry cash, and about the same number said they use it a lot.

80% use debit cards and are said to have run into problems earlier this month when a large part of the computer network worldwide became confused.

Retailers reported that angry and aggressive customers took their displeasure out on store staff who took no offense.

Frances Cook, financial journalist and author of Your Money, Your Future and Tales from a Financial Hot Mess, says the move to phase out cash carries huge risks, not just for the economy, but for our bank accounts and our personal lives.

“I’m one of those people who doesn’t do that very often, even though I really believe in it, because I’m just lazy and disorganised. I often find myself out and about with just my car keys and my phone, so I use Apple Pay for everything,” Cook told RNZ’s Sunday Morning.

“It’s not just that I only use my card – I only use my phone because I never want to have too much stuff on me.

“I don’t carry a wallet, I don’t carry a handbag – I’m carrying a toddler now. I have no hands left.”

And that means you sometimes inadvertently pay fees that retailers charge on goods in the name of convenience, like payWave.

“It can cost you so much more if you do that, because my favorite cafe charges a 2.5% surcharge if you pour and leave. If you just take the time to carry your card with you and swipe it, it’s cheaper.”

In some places, such as the UK and the European Union, surcharges are banned. Cook said New Zealand was “a bit weak” in this regard.

“We take a long time to implement regulations that make perfect sense and have often been in place for years in other jurisdictions. So the fact that we haven’t addressed these types of fees and payments is not surprising to me at all, because we’re simply behind on a lot of our banking regulations, and that all leads to surcharges.”

The financial impact of the Crowdstrike outage is estimated at US$15 billion (NZ$25 billion). This outage was resolved within hours and was easily fixed.

In the event of a major outage, financial backup is necessary, Cook said.

“These kinds of things that are happening are a good reminder that we can’t just say, ‘Woohoo! We’re going to a cashless society. Who needs cash anymore? That’s completely outdated.’

“Well, we actually do need a backup, we actually need a security. Because what happens if next time it’s smarter and it’s an attack, and it’s intentional and it lasts longer?

“You know, we were shut down for a couple of hours and look at the devastation it caused.”

Even from a personal perspective, there were good reasons to continue using cash, she said.

“Cash allows us to be private. I mean, we don’t have to tell the banks and credit card companies about every aspect of our lives, which doesn’t mean we’re all dishonest. We just want to be private.

“There are all sorts of things that we keep private for no reason other than it suits us, right? You know, I put a lot of my work online on social media. Do I put most of my personal life out there? Absolutely not, because it’s private, it’s special to me. It’s not for public consumption…

“I’m someone who just waves my phone at everything to pay for it — and yet I would consider myself a very private person. I don’t like being tracked. So really, that’s just pure laziness winning out over my logical brain, which is like, ‘Oh, they probably shouldn’t be tracking me that much.’

“There are implications of how much data you hand over and what can be done with it. Companies like Netflix, for example, you could think of them as a media company – in reality, they’re a data company. They predict what you’re going to watch, what keeps you in your seat, and what keeps you from logging off. That’s their business. The media is just, you know, what keeps you there.

“So if you do everything through a credit card or your phone and you just give away your information, you’re probably giving away your most valuable asset.”

And for some, cash was simply a way of life.

“I live in Te Awamutu now, right? And I’m a big fan, a big advocate of rural New Zealand, I love it, and I’m seeing a number of bank branches closing around the country, and it makes me sad because people need these branches to do things like literally physically withdraw cash.

“There are good solutions out there, like some banks coming together and creating hubs where you have a few employees and it’s a hub for all the different banks. I think that’s a brilliant idea and I’d like to see more of that.”

While businesses have good reasons for not accepting cash, such as crime, Cook says she would like to see the acceptance of physical cash made mandatory.

“I don’t think the rules say you have to accept cash unless you’re paying a debt with it. In that case, you have to accept whatever form of payment is offered. I find that interesting because before I looked into it, I assumed it was legal tender. Of course, you have to accept it.

“Now I don’t want to put unreasonable restrictions on businesses because I think these are tough times for them. As it stands, they don’t have to take the time at the end of the day to fill the till, or they’re less susceptible to being robbed if there’s less money in the till, so I understand there’s an argument for allowing businesses to go cashless…

“But I still think I would like to see it, that you have to accept cash – that if someone has legal tender, you have to accept it. Whether we’re talking about cash or anything else in business, going all-in on one thing is always known to be very dangerous. It’s the first rule of investing.”

rnz.co.nz