One-third of consumers make no cash payments

Cash makes up only 10 per cent of the value of consumer payments in a typical week and around one-third of consumers are not using cash at all.

These are among the findings of the latest Reserve Bank Consumer Payments Survey, which recorded the details of every transaction 1100 respondents made in a single week late last year.

Overall, the survey showed that Australians are continuing to switch to electronic payment methods in preference to cash and confirmed that personal cheques are seldom used for consumer payments. Contactless technology has facilitated the growth in low-value card payments, use of mobile devices for payments doubled over the past four years and there has been strong growth in "automatic" payments.

Debit cards were the most commonly used means of payment, overtaking cash for the first time. Debit cards accounted for 44 per cent of the volume of respondents' payments - up from 30 per cent in the 2016 survey and 24 per cent in the 2013 survey.

Cash accounted for 27 per cent of the volume of payments, compared with 37 per cent in 2016 and 47 per cent in 2013. When measured by value cash's share is down to 10 per cent, down from close to 20 per cent in 2013.

Credit and charge cards accounted for 19 per cent of payments, compared with 22 per cent in 2016 and 19 per cent in 2013.

Bpay's share of payments was unchanged at 2 per cent and PayPal's dropped from 3 per cent to 2 per cent. Cheques made up just 0.2 per cent of payments.

The RBA says that despite the fall in the use of cash, "some people continue to rely on it heavily in their daily lives".

People over age 65 make over half their payments using cash. Lower income households tend to use cash more than households with higher incomes.

At the other end of the scale, around one-third of respondents reported using no cash at all in a typical week, compared with 18 per cent in the 2016 survey.

The shift away from cash has occurred for transactions of all sizes, although cash still accounts for 45 per cent of payments under $10.

When asked about why they used cash, respondents cited factors such as merchant acceptance, fees and pricing.

The median amount of cash people hold in their wallets is $30 - down from $55 in 2013. A quarter of people do not keep cash in their wallets.

The shift to electronic payments has been more pronounced among younger Australians. Respondents aged under 40 used cash for less than 15 per cent of their payments last year, which is about half the share for that age group in 2016.

People under 40 are also leading the adoption of smartphones and other mobile devices for payments.

Growth in the use of cards, particularly debit cards, was strongest for lower value transactions. Cards displaced cash as the most common form of payment in cafes, restaurants, pubs and small food stores for the first time last year.

"This ongoing shift to cards for relatively small purchases has been facilitated by the adoption of contactless functionality by consumers and merchants. Around half of all in-person payments were made by tapping a debit or credit card on a card terminal in 2019," the RBA said.

A further 5 per cent of in-person payments were made using a smartphone or other payment-enabled device, such as a watch.

Overall, 83 per cent of point of sale card transactions were contactless.

While mobile device contactless payments still account for a relatively small share of consumer payments, the use of mobile devices for payments is growing.

Ten per cent of respondents made at least one mobile device payment during the survey week, which is twice the share in 2016. Among people under 40 the proportion was 20 per cent.

Around 55 per cent of respondents made at least one online payment last year, which was about the same as in 2016. The share of payments made online, by number, was 13 per cent, which is a similar share to the last two surveys.

One significant change in online payments is the increasing use of mobile apps. Forty per cent of online payments were initiated through apps rather than traditional web browsers. This is an increase from 20 per cent in 2016.

Another change was the growing number of people using previously filled card details in an app or online payment service, rather than filling in the details at the checkout stage. Such payments include ride-sharing apps. About 45 per cent of survey respondents used stored payment details for an online payment last year.

"This is consistent with a trend towards payments becoming more seamless from the perspective of the consumer," the RBA said.

The share of automatic payments made through direct debit and recurring "pay anyone" arrangements was 9 per cent - up from around 7 per cent in 2016.

When combined with debt repayments and other forms of automatic payments, around one-fifth of all payments were made automatically - up from around 15 per cent.

While consumers have a broader range of options with which to make payments, it is worth noting that many of these newer services ultimately use existing card networks to facilitate the payment.