The Reserve Bank has moved to the next stage of a plan that could see New Zealanders using an electronic version of cash in the coming years. 1News looks at what this might mean for you.

When was the last time you paid for something in cash?

Those moments are becoming fewer and further between for many of us, according to Reserve Bank statistics, with its most recent figures showing more than 30% of people hadn’t used cash in the past seven days.

This is why the Reserve Bank is working through a four-stage process to see if the country should move to using a digital currency. But don’t panic if you’re still a “cash is king” diehard – a central digital currency wouldn’t replace cash.

Here’s what you need to know about what payments might look like in a few years.

What is digital cash?

A digital currency would be issued by the Reserve Bank and hold the same value as the traditional banknotes and coins also issued by the central bank.

It would likely be accessed by either a physical card, digital wallet, or an app on your phone.

People would be able to choose a digital cash provider and open a digital cash account with them. This could be with their regular bank or it might be through a private payments company.

Digital cash could be used to buy items in shops or online, or to send money to other people instantly. At the moment, people need to hold accounts at the same bank in order to make that kind of instant digital payment.

People would be able to use their phones to make and receive payments by holding two devices together. For example, if you wanted to pay back a friend for something they had bought you, you could hold your phones together to transfer the money straight away.

Like cash, digital currency would be private – the Reserve Bank would not be able to see what you are spending it on.

Would digital cash still work during an internet outage?

The Reserve Bank says digital cash could still be transferred in 'offline mode'.

Whenever the question of digital money comes up, people often ask what would happen in the case of a disaster and communications went down. How would people pay for things while they waited for systems to get back online?

The Reserve Bank says digital currency would still work if the internet was down.

While Eftpos systems rely on an internet connection, people could still use digital cash in “offline mode” to make payments. They could download digital cash to their phone or a physical card and then make a payment to another device using Bluetooth.

When might we see digital cash?

There are still a few hoops to jump through for a central digital currency.

The Reserve Bank is currently working through the second part of a four-stage plan.

This stage includes high-level design options for digital money and asking people for feedback on those proposed design features.

Public consultation on digital cash is open now until July 26.

People can either complete an online survey about it or read the consultation documents and upload a written submission.

After that consultation, the Reserve Bank will develop requirements for digital cash and draw up a cost-benefit analysis. It expects to wrap Stage 2 in 2026, at which point it will decide whether to move to the next stage.

If it does proceed, Stage 3 would see digital cash prototypes developed and tested, with more opportunities for the public’s feedback.

That stage would be completed between 2028 and 2029, with the last stage seeing digital cash introduced around 2030.