Debit now fastest growing payment type

The frequency of non-cash payments increased by eight per cent last year, according to a new study.

According to the Bankwest Cash Report, released yesterday, the fastest growth of any transaction type was the use of debit cards for small transactions.

Consumers made 2.6 billion debit transactions in 2011 - an increase of 14 per cent.

This is good news for banks, which make higher profits on transaction accounts when account holders spend with cards rather than carry large amounts of cash around in their wallets.

However, debit had the smallest share of non-cash retail transactions by value, with a share of just one per cent. The total value of debit transactions was A$155 billion.

Cash accounted for 62 per cent of household payments. According to the study, there was an increase in the amount of cash in circulation in the past year.

Over the past 12 months, cash in circulation rose by seven per cent, up from two per cent the previous year.

The number of credit card transactions increased by six per cent in 2011, according to the study. The increase in the use of credit cards is, in part, a result of more online purchasing.

Credit cards are the most popular payment type for online purchases, accounting for 61 per cent of online purchases.

Online payments now account for 17 per cent of non-cash retail payments.