Cash use in Australia has dropped dramatically. ATMs are disappearing as digital wallets soar in popularity. Is cash dead? Not quite – it turns out Aussies are holding on to more cash than ever even as they opt for cashless payments.
Changing attitudes, changing habits
Business Insider predicts that global non-cash transactions will exceed 1 trillion by 2024 due to several factors, including mobile commerce growth, more small businesses accepting credit card payments, and increased digital wallet adoption.
In Australia, ANZ Bank saw digital wallet transactions surge more than 50% in the six months leading up to July 2020 compared with the same period last year. Likewise, Mastercard has seen more digital wallet payments, with one in four tap-and-go payments being made via mobile.
This is partly due to more than half of Aussies welcoming the idea of a cashless future. A Capterra survey found that 58% of Australians have a digital wallet installed on their mobile devices.
Another catalyst for the proliferation of digital wallets is accessibility – all four major Australian banks now offer various types of digital payment methods.
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Other popular alternatives to cash
- Debit cards account for more than 70% of all card transactions in Australia, according to Dynamic Business.
- Buy Now, Pay Later (BNPL) methods like Zip and AfterPay have seen huge increases on customer numbers as more Australians now prefer interest-free installments.
- Cheque payments from June 20202 amounted to 3.3 million in retail spending although cheque payments for retail spending have been steadily decreasing by 28% Year on Year, according to RBA data.
- No-interest credit cards are now being offered by National Australian Bank (NAB) and Commonwealth Bank of Australia (CBA).
Cash is still king
Despite Australians’ increased use of digital wallets and BNPL, they’re holding onto more cash than ever – the Reserve Bank of Australia (RBA) reports that the amount of cash in circulation surged to $94 billion, up by $11 billion, as more Aussies started keeping money at home.
For some, sitting on spare cash offers a sense of security, while for others, it’s a matter of practicality – wealthy Australians withdrew disproportionately large sums, some in the millions, from their savings in March 2020 as the stock market plummeted 30%, and amid growing concerns about bank solvency and negative interest rates.
RBA also notes that while cash withdrawals swung upward six months later, withdrawals were still down by 22% in July. However, Australians were still making huge bank withdrawals even as 2,152 ATMs were removed between April and June 2020.
Why use digital wallets?
- Convenience – Digital wallets allow for easier, quicker, and frictionless payments. Since you won’t need cash to make purchases, you won’t need to withdraw and carry money with you at all times.
- Security – Contactless payments don’t require you to provide card information though you will be asked for your PIN when making purchases worth over $100. Privacy controls, transaction identifiers, and other checks and balances help minimise fraud. If you lose your mobile device, you can easily deactivate your digital wallet, whereas cash can quickly get lost or stolen.
- Incentives – Digital wallets often have a rewards system that lets you accumulate points with each purchase and avail freebies, discounts, and other perks.
- Costs – Most digital wallets will let you make payments at no additional cost. However, certain services and transactions may come with a flat fee.
- Ease of use – Using a digital wallet can help you simplify your life as it allows you to make essential purchases and pay your bills from a single source.
The way Australians do business is changing rapidly as evidenced by the latest trends in digital wallets and other forms of contactless payments. Mobicity provides the latest information on the mobile industry to help you stay in tune with these changes. Don’t skip a beat – subscribe today for timely and relevant content.