RDP 2014-05: The Changing Way We Pay: Trends in Consumer Payments 4. Cash

Cash remained the most frequently used instrument in 2013. Cash use was more common for lower-value payments and payments at small food retailers and pubs and bars, where the speed traditionally offered by cash payments may have influenced its use. Cash was used extensively at the point of sale, but was not used to make remote payments (Figure 3). Cash use tended to increase with the age of the respondent, reflecting that younger individuals appear to be more comfortable relying on newer technologies for their payment needs. Second, cash use was lower for the highest household income quartile, although research suggests this may be due to the effect of income on the consumption mix and access to financial services (such as credit cards).[7],[8]

The use of cash has decreased consistently since 2007; as a share of all payments, cash fell from 69 per cent in 2007 to 47 per cent in 2013. The increased use of remote payments has contributed to this fall. Holding the share of payments made using cash at the point of sale constant at the 2007 level (73 per cent), the increase in remote payments has contributed around one-third of the reduction in cash use overall. Two-thirds of the fall can be attributed to the reduction in cash use at the point of sale, which has fallen to 55 per cent in 2013. The corollary is that card use at the point of sale has risen; developments in the acceptance and use of cards are discussed in Section 5.

Figure 3: Payment Method Use for Each Channel – 2013

The decline in cash has occurred across most types of purchases and respondents. Cash use has fallen for all payment values and across most merchant categories (Table 7). An exception to the trend is payment for services (which include a diverse group of merchants, for example music teachers, plumbers and accountants), where cash use has been fairly steady at above 50 per cent of the number of payments in all three surveys.

Consistent with the widespread decline in cash use across merchant categories and payment values, cash use declined universally across all age and household income groups (Table 8). Within this broad trend, however, the 2013 data suggest that the movement away from cash was stronger for some groups than others. Across age groups, the decline in cash use was significantly smaller for respondents aged 65 years and over, a group that has traditionally used cash much more than younger respondents. Cash use by those living in capital cities also declined by more than those living in regional areas.

Table 7: Use of Cash and Card Payments for Different Types of Purchases
Per cent of number of payments within each category
2007 2010 2013
Cash Card Cash Card Cash Card
Payment value ($)
1–10 95 4   91 7   78 18
11–20 77 21   71 26   56 39
21–50 55 40   50 43   37 54
51–100 36 54   29 59   23 63
101–500 30 51   20 53   14 59
501+ 18 49   14 40   7 51
Broad merchant categories
Food retailers 90 10   85 14   72 27
Services 51 27   56 33   50 38
Other 68 17   61 18   46 28
Holiday/leisure 78 19   67 25   43 40
Petrol/transport 60 36   53 43   41 54
Goods retailers 62 35   56 40   40 48
Supermarket 60 39   54 46   38 59
Bills/medical 44 33   25 32   18 42

Note: Shares for each group do not add to 100 as the shares of BPAY, phone or internet banking, personal cheque, PayPal and ‘other’ payments are not shown

Sources: Colmar Brunton; Roy Morgan Research

Participants were asked to record transfers of money to family or friends for the first time in the 2013 survey. By number, around half of all transfers to others recorded in the survey were made using cash and, as with consumer payments, this was the most frequently used payment method for transfers of less than $50. Around half of transfers to family and friends were made by respondents with children, suggesting that many were likely to be payments to children. Although the sample collected is small, the data also indicate that those aged under 30 years were considerably less likely to use cash to make a transfer to others, preferring instead to use internet banking (often via smartphones).

Table 8: Use of Cash and Card Payments across Demographic Groups
Per cent of number of payments by respondents in each group
2007 2010 2013
Cash Card Cash Card Cash Card
Age (years)
18–29 67 29   58 33   44 47
30–39 61 33   54 37   40 47
40–49 68 27   57 35   47 43
50–64 72 24   66 28   48 41
65+ 78 18   73 21   60 33
Household income
1st quartile 72 22   67 24   49 39
2nd quartile 69 26   59 33   50 39
3rd quartile 70 25   59 34   49 41
4th quartile (highest) 63 32   59 34   43 49
Capital 69 27   61 32   46 44
Regional 70 25   62 30   51 39

Note: Shares for each group do not add to 100 as the shares of BPAY, phone or internet banking, personal cheque, PayPal and ‘other’ payments are not shown

Sources: Colmar Brunton; Roy Morgan Research

4.1 Cash Holdings

The 2010 and 2013 surveys asked respondents to record not only their cash payments, but also the amount of cash they held on their person (in a wallet or purse) at the start of the survey and the value of each top-up.

Despite the decline in the use of cash, the survey showed no decline in cash holdings. While the total value of cash payments per week fell to $183 per person (from around $259 in 2010), the average level of cash in respondents' wallets increased slightly to $112 from $93 in 2010 (Table 9). The surveyed increase in cash holdings is consistent with economy-wide data showing the value of banknotes in circulation continuing to grow at its trend pace.[9] This highlights the fact that cash is not just used as a means of payment, but serves also as a store of value and may be held for precautionary reasons.

Respondents that used cash more often – such as older individuals – also reported holding higher amounts of cash. In 2013, more than one-third of respondents aged under 30 years of age reported holding less than $20 in their wallet at the start of the survey in comparison to only 11 per cent of those aged 65 and over; broadly similar shares were observed in 2010.

Table 9: Cash Holdings for Transactional Purposes
2007 2010 2013
Cash held in wallet
Mean ($) na 93 112
Median ($) na 50 55
Number of cash top-ups per person per week 1.4 1.6 1.5
Via ATM 0.9 0.9 0.7
Via cash-out at the point of sale(a) 0.3 0.4 0.4
Via bank branch(b) 0.1 0.1 0.1
Via other source 0.1 0.2 0.3
Mean value of top-ups 180 217 125
Via ATM 182 197 138
Via cash-out at the point of sale(a) 83 78 71
Via bank branch(b) 386 1,395 297
Via other source 156 85 96

(a) Available with or without a purchase at participating merchants
(b) High margin of error due to small number of payments recorded

Sources: Colmar Brunton; Roy Morgan Research

In 2013, respondents reported a similar number of cash top-ups to 2010 and 2007, though they were of lower average value ($125). The decline in the average value is partly explained by a reduction in the use of ATMs as a means to top-up cash and an increase in the use of cash-out at the point of sale, which typically involves a lower top-up value.[10] This switch toward cash-out at the point of sale is likely to have been influenced by the unlimited number of cash-out transactions that can take place for most account holders, the convenience of obtaining cash while undertaking a purchase rather taking time to locate an ATM and the potential to pay a charge for using a ‘foreign’ ATM (see Section 8.2).

The survey suggests that around 15 per cent of cash by value was obtained from a source outside the cash distribution network of ATMs, cash-out at the point of sale and bank branches in 2013. The median value of these transfers was around the same as for cash-out at the point of sale. All age groups received cash through these alternative sources, such as cash wage payments or transfers from family and friends.


To control for age effects and better identify the effect of income on the use of payment methods, references to household income quartiles refer to age-matched income quartiles: that is, each age group was divided into household income quartiles and then respondents in each income quartile were grouped together. [7]

Meredith, Kenney and Hatzvi (forthcoming) find that income is generally not a statistically significant determinant of when cash is used once these other factors are controlled for in a regression framework. [8]

For further details of cash holdings in 2013 and cash as a store of value see Meredith et al (forthcoming). [9]

RPS data on the number and value of ATM withdrawals suggest a decline in their frequency and a small decrease in their value. As such that it appears the consumer survey may overestimate the decline in the average value of ATM withdrawals. Nevertheless, the ranking of top-ups via cash-out at the point of sale, ATMs and bank branches by size is consistent with the RPS. [10]