Ongoing popularity of payment apps and online shopping cutting out cash
In recent years we have seen sharp growth in the use of payment apps and online shopping via smart phones.
This increased preference is broken down in PWC’s Global Consumer Insights Pulse Survey, which found that smartphone shopping is at a historic high with 41% of global respondents saying they shop daily or weekly via mobile or smartphone.
Australia is following the same trend, with 43% of Australians also reporting daily/weekly shopping via smartphone.
In addition to the increased smartphone shopping, there has also been significant investment in online payment technologies over the last year. KPMG’s report into fintech trends in 2021 says that last year saw “the widespread uptake and use of digital and contactless payments”, with many marketplace platforms partnering with financial institutions and fintechs to deliver them.
Instalment-based financing apps such as Afterpay are one such example. An investment bank like JP Morgan teaming up with Volkswagen’s payment platform is another.
In line with new payment technologies taking off, KPMG also reports “an increasing demand for alternative payments models like buy-now-pay-later.”
Apps cutting out cash and changing the way we shop
The large amounts of money being invested in online payment methods continue to make it easier for online shoppers by providing them with more options. Various payment platforms such as Afterpay as well as Apple, Samsung and Google Pay have made a big difference in the way people even think about shopping.
Online shopping is not only very convenient and time saving but has also recently become very trendy, with apps like Apple Pay or buy now pay later options such as Afterpay seemingly attracting as much media attention as they do customers.
In conjunction with these trends, it has been reported that cash usage is down. According to Reserve Bank research, cash accounted for 69% of retail payments in 2007 and this percentage decreased to just 27% by 2019 and these figures have continued to fall, especially since the pandemic.
It is clear that over time, consumers are favouring newer shopping and payment styles and are leaving behind traditional methods that are less convenient and more time consuming.
Digital payment technology is very much on the radar of the government and the reserve bank who clearly see this as the future of shopping and paying for things in Australia. Reserve Bank Governor Philip Lowe concluded a recent speech on the topic by saying, “Both the regulators and the government understand this and are seeking to put in place arrangements that encourage innovation and competition and make sure we have a secure and efficient system”
If you're interested in learning more about different ways to pay, or the differences between credit cards and buy now pay later, check out this guide.
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