Credit cards in wallet

Card payments overtake cash payments

31 July 2017

A new survey conducted by the Reserve Bank of Australia has found that card payments have, for the first time, surpassed cash payments in Australia, driven largely by the rise of the tap and go payment option which is built into the majority of Australian credit and debit cards.

The survey found that cards are now the most used consumer payment method, accounting for 52% of all transactions.

A decade ago in 2007 just 26% of transactions were by card and 70% were cash, this figure has nearly halved to 37%.

60% of the card transactions were tap and go.

The RBA's consumer payments survey, released earlier this month, surveyed 17,000 payments made by more than 1,500 participants during a week.

According to Sydney University marketing and behavioural psychology professor Donnel Briley, research has shown that people spend as much as 40 to 50% more in a transaction, particularly on small items, when they do not use cash.

Psychologically speaking, if we're not handing over cash, it does not feel as much like we are spending real money.

Tap and go technology was launched in Australia in 2009 but was not widely adopted until mid 2013.

The RBA released further findings which showed that credit and debit card use has increased nationwide over the last three years, with the most significant shifts at food retailers, on public transport and taxis. The RBA also noted that the introduction of booking apps for ride-sharing services and taxis have also likely contributed to the rise of card payments.

This growing dependence on cards is evident across all age demographics, with cardholders of all ages are using tap and go more than they did three years ago, with nearly 60% of participants in 2016 making at least one contactless card payment during the week, compared with around one-third of participants in 2013.

Unsurprisingly, cash is still popular among older Australians with participants aged 65 and over choosing hard cash to make more than 50% of their payments in 2016, said the RBA.

Although many of the banks have launched and promted heavily their own mobile payment apps or partnered with Apple Pay, Samsung Pay and Android Pay, mobile payments are still lagging behind. According to the survey, close to 90% of participants said they had never used mobile payments and didn’t intend to.

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