Banking News

“Tap and go” payments driving out cash, says RBA

(26 July 2017 – Australia) New figures from the Reserve Bank of Australia (RBA) indicates cash payments are in decline as “tap and go” technology makes cards the most popular way to pay in Australia.

According to the Reserve Bank’s triennial consumer payments survey, the use of cards has doubled in little under a decade and the big change has been the rise of contactless tap-and-go transactions.

More than 60 percent of all point-of-sale card payments were contactless last year, the RBA said.

The RBA said tap-and-go cards are now largely ubiquitous, with 85 per cent of consumers waving them on a daily basis compared with two-thirds of respondents in 2013.

With around 33 percent of all point-of-sale payments contactless in 2016 — compared to 11 per cent in 2013 — the way people pay is shifting and cash has become the first casualty of convenience.

Cash purchases have evaporated from 69 percent in 2007 to just 37 percent in 2016 — and Australians carry an average of A$40, $15 less than 2007.

Consequently, Australians aren’t using ATMs as much. In the four previous surveys, Australians “topped-up” their cash one-and-a-half times a week; now they don’t even do it once a week. The central bank said the increasing use of cards for cheaper daily transactions — 40 percent of in-person payments under $20 in 2016, compared with just 10 per cent in 2007 — reflected the normalisation of contactless technology.

“Cards are now the most commonly used payment method for all but the lowest- value transactions and as a result, the median value of card payments at the point of sale continued to decline from $40 in 2007 to $28 in 2016,” the bank said.

Meanwhile, research earlier this year from East & Partners found that cash receivables plummeted by 46 percent between 2010 and 2016. East said that should this trend continue, cash payments across all Australian businesses is predicted to fall below five percent by 2019 and then hit two percent within the next five years.

Over the same period, data from East & Partners’ Australian Merchant Payments Report – which directly interviews 2,200 business annually – shows credit card payments have also dropped by 11 percent, while debit card receivables have surged by 56 percent.

“Backed by recent figures from the Reserve Bank showing ATM withdrawals falling to all-time lows, East’s research indicates that cash is increasingly vanishing as a preferred payment method,” said Martin Smith, Head of Markets Analysis at East & Partners.

“As consumers continue to embrace platforms such as wearables, contactless and mobile payments, and they’re further integrated into everyday life, the need to carry cash will continue to diminish at an accelerating rate.

“Additionally, the Reserve Bank’s surcharging limits coming into effect later this year, will spur consumers to use payment options linked to their debit and credit cards more for everyday purchases.”