Contactless terminals, online shopping boost cards and Paypal

A team of staffers from the Reserve Bank of Australia's Payments Policy Department has released a discussion paper, titled "The Changing Way We Pay: Trends in Consumer Payments".

The analysis draws on data collected via a survey of consumers' use of payment methods, conducted in November 2013. This was the third in a series, with previous RBA surveys dating back to 2007 and 2010.

Unsurprisingly, the results confirm that cash and cheque use continues to fall, while the use of cards has risen markedly, along with increased use of PayPal.

"The growth in the use of cards and the reduction in cash use are evident across households in all age and household income groups," the RBA paper said.

And, while growth in remote payments is one contributor to the observed change in the use of cash and cards, the main reason for this was increased use of cards at the point of sale.

"In particular, we find some indication that the adoption of contactless technology, which lowers the tender time of card payments at the point of sale, may have increased card use," the RBA stated.

There were slight discrepancies observed between the debit and credit card usage tracked in this survey and the retail payments statistics collected from financial institutions by the RBA, but the overall patterns remained consistent. For example, cash was more heavily used for payments to food retailers compared with holiday expenditure or bills, which were typically paid using cards or other electronic methods.

The growth in online shopping has led to a rise in the share of purchases being made remotely (ie, not at the physical point of sale) from six per cent in 2007 to 14 per cent in 2013. This was also identified by the RBA as a factor in the increasing use of PayPal.

Internet payments (which include smartphone payments) grew as a share of all remote payments, from just over half in 2007 to around 90 per cent in 2013, with a corresponding fall in postal and telephone payments.

In addition, smartphones were used to transfers funds between individuals by one in ten, although these were for relatively large amounts, with cash still being the preferred person-to-person payment method.

Surcharging was another area the RBA re-examined, finding it was paid on around four per cent of all card payments, a similar level to that recorded by the first two studies. The median value of surcharges paid was 1.8 per cent of the value of the payment. Around one-quarter of all card surcharges were in relation to bill payments.