Payments and how they are made in an economy have been transformed over the past few years as “paywave” credit/debit card technology, non-banking mobile platforms, and peer to peer payment systems render cash in the eyes of some, a barbarous relic.
Now we have some idea of how dramatically cash use is falling.
Use of cash fell more than 30% between 2007 and 2013 according to a new RBA report released this week.
Think about that. The use of cash – once the engine of everything – has fallen by a third in just six years.
Using the “results from the 2013 Survey of Consumers’ Use of Payment Methods and regression analysis to examine trends in cash use in Australia” RBA Staffers Jessica Meredith, Rose Keeney and Eden Hatzvi found that cash was favoured by older Australians, as a store of value (through keeping high denomination notes), and important for low-value transactions.
Their report found:
Cash accounted for 47 per cent of the number of transactions in the 2013 survey, compared with 69 per cent of transactions in the 2007 survey (Graph 2). While cash was the most frequently used method of payment in the 2013 survey, cards (including all debit and credit cards) were used nearly as often.
While “cash was the preferred payment method for low-value transactions” for all transactions greater than $20 it accounted for less than 50% of the total. The proliferation of payments technologies like “paywave” and tap-and-go on mobile phones may change this going forward, by making card usage easy for low value transactions.
No doubt however it is the “other” category that holds the most interest and is most disruptive in terms of the impact in the way Australian interact with each other and in the retail environment. While Meredith, Keeney and Hatzvi weren’t occupied with the growth of “other” category, rather with the use of cash, it is clear in the data that not only the number of transactons risen but the value also.
For the moment though the RBA research shows that age, saving for emergencies, and low value transaction are keeping cash as the King of the Australian payment system. But the rise of cards and other methods seems like a trend that is both entrenhced and growing.