Payment-enabled devices accounted for 8 per cent of in-person consumer payments in Australia last year, increasing from just 1 per cent three years ago.
The Reserve Bank has released its latest triennial Consumer Payments Survey, which puts the growth in payments using smartphones and “wearables” down to an increase in the number of financial institutions offering digital wallet options to their customers.
There has also been an increase in the range of devices equipped with mobile payment functionality.
The survey of 1100 people was conducted in October and November last year, recording details of every transaction participants made over a week.
The RBA found that payment cards (debit and credit) were used for 63 per cent of the number of payments last year, compared with 52 per cent in the previous survey.
Debit cards accounted for 44 per cent of the number and 36 per cent of the value of consumer payments, while credit cards accounted for 19 per cent of the number and 25 per cent of the value.
The survey confirmed the decline in popularity of credit cards. Between 2016 and 2019, the proportion of credit cards users who said they were “better off” having a credit card fell from 40 per cent to 26 per cent, while the proportion who said they were “worse off” having a credit card rose from 13 per cent to 19 per cent.
The use of cash has fallen from 69 per cent of the number of consumer payments in the 2007 survey to 37 per cent in the 2016 survey and 27 per cent last year.
Cash accounted for 11 per cent of the value of consumer payments – down from 18 per cent in 2016.
Cards overtook cash as the most common way of making payments of $10 or less in 2019. Cash accounted for 45 per cent of these payments, down from 62 per cent in 2016.
Cash is still popular with older people: among the over-65s more than 50 per cent of payments were made with cash. Around 15 per cent of survey participants used cash for 80 per cent or more of their in-person transactions.
Ten per cent of respondents used only cash, down from 12 per cent in 2016, while one-third of participants did not record any cash payments (compared with 18 per cent in 2016).
A small proportion of the number of payments was made using Bpay (2 per cent), internet or phone banking (3 per cent), PayPal (2 per cent) and cheque (0.2 per cent).
Bpay’s share remained steady, compared with the 2016 survey, and PayPal’s fell one percentage point.
The RBA said one of the most notable developments was the big increase in contactless card payments. The share of in-person payments made by tapping a card terminal increased from 10 per cent in the 2013 survey to 50 per cent last year.
Contactless technology has facilitated greater use of cards for low value payments. The share of in-person payments of $10 or less that were made with cards rose 20 percentage points over three years to 51 per cent.
The use of mobile phones and other payment-enabled devices to make contactless payments grew over the three years but such payments still only accounted for 5 per cent of in-person payments.