RDP 2017-04: How Australians Pay: Evidence from the 2016 Consumer Payments Survey 3. Trends in Consumer Payments

The 2016 CPS showed a continuation of the broad trends in retail payments evident in earlier surveys. Australian consumers have been switching to electronic payment methods in preference to paper-based methods – cash and cheques – for their transactions. Most notably, the share of transactions using cards has doubled since 2007 (Table 1). Credit and debit cards combined were the most frequently used means of payment in 2016, overtaking cash for the first time. Cards were used for just over half of all consumer payments when measured by the number of payments.

Table 1: Consumer Payment Methods
Per cent of payments
  2007 2010 2013 2016
Number of payments
Cash 69 62 47 37
Cards 26 31 43 52
Debit cards 15 22 24 30
Credit and charge cards 11 9 19 22
BPAY 2 3 3 2
Internet/phone banking(a) na 2 2 1
PayPal na 1 3 3
Cheque 1 1 0.4 0.2
Other(b) 1 1 2 4
Value of payments
Cash 38 29 18 18
Cards 43 43 53 54
Debit cards 21 27 22 26
Credit and charge cards 23 16 31 28
BPAY 10 10 11 8
Internet/phone banking(a) na 12 10 10
PayPal na 1 2 4
Cheque 6 3 2 2
Other(b) 3 3 5 3

Notes: Excludes payments over $9,999, transfers (payments to family and friends) and automatic payments
(a) Payments made using banks' internet or telephone facilities; does not include other payments made using the internet
(b) ‘Other’ methods would include prepaid, gift and welfare cards, bank cheques, money order, Cabcharge, and other online payment methods apart from PayPal (e.g. POLi)

Source: RBA calculations, based on data from Colmar Brunton, Ipsos and Roy Morgan Research

In recent surveys, a notable development has been the increasing use of cards for lower-value transactions – for example, cards were used for 40 per cent of in-person payments less than $20 in 2016, compared with 10 per cent in 2007. In recent years, this mainly reflects the widespread adoption of contactless functionality by merchants and consumers. In 2016, 85 per cent of survey participants reported holding a contactless card, compared with two-thirds of respondents in 2013. Most of the growth in contactless payments has been due to consumers tapping their ‘physical’ plastic cards at contactless terminals, with the ability to make tap-and-go payments using a mobile phone still a relatively new feature of the Australian payments system.

The share of transactions (by number) using some other electronic means of payment was broadly unchanged. PayPal, internet/phone banking and BPAY accounted for relatively small shares of the number of payments recorded in the survey. A small decline in the relative use of BPAY may reflect increased use of automated payments (which include BPAY) and direct debits for bill payments, which were recorded separately (see Section 7.2).[5]

As a greater share of consumer payments are made electronically, relatively fewer payments are made in cash. By number, cash was used for 37 per cent of consumer payments in 2016, compared with nearly 70 per cent a decade or so ago. Cash was, however, still used in a material share of consumer payments; and when measured by the value of transactions, the relative use of cash was unchanged from 2013 (Table 1). Personal cheques were used for only 0.2 per cent of consumer payments in the 2016 survey.

Although there are some notable differences in the payment patterns of different demographic groups, the move towards electronic means of payment has been evident quite broadly. Consumers of all ages and incomes are, on average, making a smaller share of their payments in cash than they were a decade ago (Figure 1). Nonetheless, some individuals continue to rely extensively on paper-based payment methods.

Figure 1: Cash Payments
Per cent of number of payments within each category
Figure 1: Cash Payments

Source: RBA calculations, based on data from Ipsos and Roy Morgan Research

Similar trends in consumer payments have been apparent in a number of other countries. Several advanced countries conduct studies of payment patterns similar to the Reserve Bank's CPS. Although differences in survey design and coverage mean the results of these surveys are not fully comparable, they indicate that consumers globally are shifting away from cash and towards electronic payment methods such as cards (Figure 2). There are, however, some notable differences across countries. German consumers, for example, use cash in a higher share of their transactions than consumers in many other countries; and the transition to electronic payments has been particularly pronounced in Sweden.[6]

Figure 2: Trends in Card and Cash Payments
Per cent of number of payments
Figure 2: Trends in Card and Cash Payments

Notes: Card and cash do not sum to 100; observations are not directly comparable due to differing survey methods and inclusions across countries

Sources: Bank of Canada; Colmar Brunton; De Nederlandsche Bank; Deutsche Bundesbank; Federal Reserve Bank of San Francisco; Ipsos; RBA; Roy Morgan Research; Sveriges Riksbank


This explanation is consistent with continued increases in these types of payments recorded in other sources. For instance, according to the RBA's monthly retail payment statistics, the number of direct debits and BPAY payments increased by around 30 and 20 per cent, respectively, between 2013 and 2016. [5]

See also Bagnall et al (2014) and Davies et al (2016) for a discussion of cash use across countries. [6]