Cash in decline as payments go online

When did you last write a cheque? Probably not for a long time, and if you are in your twenties you possibly have never owned a chequebook. Cheques now account for only 1.2% of all non-cash transactions in Australia.

Cash use is also falling as more Australians switch to electronic payments, although the folding stuff is still the most popular way to pay.

Withdrawals from ATMs dropped 6.6% in the 2016 financial year, with about $700 million withdrawn, compared with $750 million in 2014.

Electronic debit and credit use jumped 7.2% in volume and the value of transactions rose 2.6%, according to the Australian Payments Clearing Association (ACPA).

Credit and debit card use grew 12.1%, on top of 10.7% growth in the 2015 financial year.

Debit cards have proved an enormous success with consumers, outstripping growth in all other ways to pay without cash. The average person is now making nearly 200 payments by debit card a year, a ten-fold increase on 1996 and a doubling on 2011.

But although consumers are turning from cash, it remains the predominant payment method, says the Reserve Bank of Australia (RBA) in its December bulletin – although the central bank is using figures from 2013.

The RBA’s chart above shows internet payments as static, but that has probably changed since 2013.

The Bank says it produces and issues notes to meet public demand, and that demand rose by 6% in the year to November, in line with recent years.

Cash is still popular because payment is immediate, anonymous and it’s widely accepted. Also, nothing beats “real money” when the internet is down or electricity blacked out.

Cheque use has dropped nearly 73% in 10 years and the 17.2% fall in the year to June 30, 2016 was the biggest drop in the last decade, says ACPA in its sixth annual Milestones report on the digital economy.

Governments have traditionally been big cheque issuers but that is changing according to The New South Wales Government no longer pays by cheque.

It’s only a matter of time before the cheque will no longer be in the mail.

January 2016