Acceptance of cash at the point of sale is starting to decline, as merchants respond to the steady long-term decline in the use of cash for retail payments, which accelerated during the pandemic.
The Payments System Board annual report, released yesterday, shows that cash acceptance by retailers with a physical presence fell from 99 per cent in February 2020 to 94 per cent in June this year.
The PSB said that, as pandemic-related restrictions have eased, there has been some recovery in the use of cash for transactions. Cash was used in 27 per cent of in-person transactions in 2021, compared with 23 per cent in 2020.
Debit card use grew by 5.9 per cent by number of transactions and 12.1 per cent by value in the year to June; and by an average of 13 per cent a year by number and 11.3 per cent a year by value over the 10 years to June.
Credit card use grew by 1.8 per cent by number of transactions and 8.4 per cent by value in the year to June; and by 6.2 per cent a year by number and 3.2 per cent a year by value over the past 10 years.
Australians made around 650 electronic transactions on average in the year to June, compared with around 300 a decade earlier.
The share of debit and credit card transactions made via mobile wallets increased from 10 per cent in the March quarter 2020 to 25 per cent in the March quarter this year.
The PSB estimated that the value of buy now pay later transactions in 2021/22 was A$16 billion – an increase of 37 per cent over the previous year.
The NPP processed 25 per cent of account-to-account payments during the year, worth more than $1 trillion, up from 22 per cent in 2020/21.
The PSB said there has been a steady migration of payments previously processed via the direct entry system to the NPP. This has included some types of government payments.
The number of cheques issued in 2021/22 fell by 22 per cent to just 0.2 per cent of non-cash retail payments.
The PSB said: “From an efficiency perspective, there will be benefits in winding up the cheque system soon, given the high cost of maintaining it and the increased availability of electronic payment methods that can meet similar payment needs.”
It said it is comfortable with steps the banking industry is taking to assist cheque users to transition to alternatives and “would support an orderly wind-down of the cheque system some time in the near future.”