Card payments have overtaken cash for the first time in Australia, with transactions on debit and credit cards doubling since 2007 to become the most frequently used payment method, according to the RBA’s recently released Consumer Payments Survey.
The report found that the use of cash fell from 70% of payments “a decade or so ago” to just 37% in 2016. At the same time, 52% of transactions were made using credit and debit cards, an increase of 9% since 2013.
But the use of plastic isn’t on the increase because Aussies are racking up bigger debts - rather, convenience seems to be the deciding factor, with most of the growth in card payments owing to the fact that we’re now using plastic for smaller purchases more frequently than ever before.
In 2007, Aussies used cards to make just 10% of purchases under $20. In 2016, that number had grown to 40%, mainly on debit cards, but also “to a lesser extent” on credit cards.
According to the report, this trend towards smaller value payments being made on plastic reflects the growing use of contactless payment methods in Australia, through Tap ‘n’ Go technology like PayWave and PayPass.
In 2016, 85% of Aussies surveyed held a card equipped to make Tap ‘n’ Go payments, up from two-thirds in 2013. These contactless payments accounted for around two-thirds of all card transactions, and around one-third of all over-the-counter sales, which is 3.5 times as many as in 2013.
“It seems contactless payments are shaping up to be a major part of Australia’s spending future, especially as it becomes more and more acceptable to make small purchases under $20 by tapping your plastic,” said Mozo Director Kirsty Lamont.
Shoppers are not the only ones getting behind the Tap ‘n’ Go trend. The report also saw a rise in the number of retailers offering contactless payment methods and accepting smaller card payments.
While supermarkets and petrol stations had already embraced contactless payments by late 2013, smaller food establishments such as restaurants and cafes and transport options like public transport and taxis are now also jumping on the trend.
“This increased acceptance of small Tap ‘n’ Go purchases just might be the final nail in the coffin for cash,” said Lamont.
Late to the Tap ‘n’ Go trend? Start today by comparing your plastic options and picking up a debit card that suits your spending needs.