RDP 2014-14: The Evolution of Payment Costs in Australia Appendix B: Payment Activity in the Sample

Sixteen financial institutions (including ATM operators) provided information on both their costs and transactions relating to a twelve-month period. About three-quarters of personal credit and debit accounts in Australia were covered.[40]

ATM withdrawals and eftpos transactions continue to account for about 60 per cent of the total number of debits to transaction accounts; with a 10 percentage point fall in the share of withdrawals from ATMs since 2006 being offset by a similar increase in the share of withdrawals using eftpos (Table B1). MasterCard & Visa debit transactions account for just over 15 per cent of the number of debits, with a similar number made through electronic forms of payment such as BPAY and direct entry. The number of withdrawals (debits) from transaction accounts through cheques now makes up less than 1 per cent of the total number of debits to these accounts. Cheque payments, however, continue to have the largest transaction size, at over $3,500 per cheque, on average. Given the nature of the income and expenditure patterns of most households, the number of debits to transaction accounts continues to far outweigh the number of credits; with most credits coming through the direct entry system, consistent with salary payments. Australian households use credit card accounts for about 200 transactions per annum. The average value of total purchases on credit card accounts was just over $25,000 per annum.

Seventeen large merchants provided information on both their payments system costs and transactions. During the twelve-month period these merchants were the recipients of about 2½ billion payments worth about $230 billion (Table B2). Purchases made at retailers comprised close to 90 per cent of the number of transactions, but about half the value of payments. This reflects the fact that the average size of a purchase at a retailer was about $50, while the average payment to a biller was about $700. Overall, the implied use of payment instruments is broadly comparable with the consumer payment patterns in Ossolinski et al (2014).

Cash accounted for about 45 per cent of the number of payments to merchants, although the share is skewed between retailers and billers at about 49 and 1 per cent of payments. Direct debit and BPAY, not accepted by retailers, make up about 70 per cent of billers' transactions. The mix of credit and debit cards in the sample is similar to the aggregate card payment statistics for Australia as measured in the Retail Payments Statistics.

Table B1: Payment Activity via Financial Institutions
Transactions from household accounts
Number Value Average size Transactions per account
Millions $ million $ Number
Transaction accounts
Cash withdrawals
ATM withdrawals 608 112,092 184 32
Branch withdrawals 29 70,678 2,412 2
Purchase only 1,802 93,593 52 93
Combined purchase/cash-out 198 19,249 97 10
Cash-out only 30 2,652 89 2
MasterCard & Visa debit 703 48,866 69 35
Cheques 31 108,094 3,533 2
Direct entry 454 231,328 510 24
BPAY 142 76,807 540 8
Total 3,997 763,360 191 208
Credit card accounts
Credit cards
Purchases 1,586 202,697 128 198
Cash advances 22 7,240 325 3
BPAY 13 8,335 640 2
Total 1,622 218,272 135 202

Source: Authors' calculations based on survey data

Table B2: Payment Activity at Large Merchants
Number of payments (millions)   Value of payments ($ million)
Merchants Retailers Billers Merchants Retailers Billers
Cash 1,147 1,145 2   31,722 31,534 188
Debit cards 824 807 17   54,848 52,009 2,839
Card present 806 805 1   51,874 51,698 176
Card not present 18 2 17   2,974 311 2,663
Credit cards 421 389 31   35,352 24,932 10,420
Card present 385 385 0.2   23,535 23,413 122
Card not present 35 4 31   11,817 1,519 10,298
Cheques 3 0.3 3   12,901 57 12,865
Point of sale 0.5 0.3 0.3   82 57 46
Remote 3 0 3   12,818 0 12,818
Direct debit 43 0 43   11,118 0 11,118
BPAY 82 0 82   89,505 1 89,505
Total 2,520 2,341 179   235,446 108,532 126,935

Source: Authors' calculations based on survey data

The number of cash transactions for the entire economy can be hard to estimate. Schmiedel et al (2012) outlines seven estimation methods, which can be grouped into two broad approaches: surveys of end-users' payment patterns (consumers or businesses) and modelling cash transactions from established data sources (e.g. from cash withdrawals, or the difference between consumption and electronic transactions). Our preferred method for Australian data – as fewer assumptions are necessary – is to use Ossolinski et al (2014) and scale up the estimate of cash transactions per person to match the population. This gives a similar estimate to scaling up the ratio of cash to card payments in Ossolinski et al with the number of card payments in the economy from the Bank's Retail Payments Statistics (5.8 billion cash transactions). Information on the number of cash withdrawals and the average transaction size provide a slightly higher estimate (about 6.9 billion). These estimates are considerably lower than RFi Consulting (2014) of 11.7 billion cash transactions, although some of this will reflect the wider scope of this estimate (which goes beyond consumer-to-business payments).


Personal and business transactions were separately identified. Identification of business transactions allowed accurate per transaction costs to be calculated and these to be scaled up to an economy-wide estimate of the cost of consumer-to-business transactions using the number of personal transactions. [40]