cash – APCA Blog

Milestones Report, May 2017: Cheque use plunges in the digital economy

Payments Direction — Thu, 08 Jun 2017 22:58:09 +0000

Our latest Milestones Report looks at the payment choices Australian make. It’s clear that the vast majority are moving away from cash and cheques faster than ever before. This is happening because widespread use of new technology combined with a…

Infographic: The Digital Economy November 2016

Alice Markie — Fri, 25 Nov 2016 00:23:03 +0000

Cheques now represent just 1.2% of all non-cash transactions as Australians show a clear preference for electronic payment methods. Over the past 10 years, cheque use has declined by nearly 73% and the rate of decline is accelerating. Simultaneously, cash…

Cash: the Next Generation

Alice Markie — Wed, 31 Aug 2016 22:36:53 +0000

The first in the new Next Generation Banknote series went into circulation today. This begs the $5 question: what role does cash play in our payments mix? Michele Bullock, Assistant Governor (Business Services) at the Reserve Bank of Australia and…

RBA data suggests 40% of credit card values in Australia are now card-not-present

Brad Pragnell — Fri, 06 Mar 2015 04:07:58 +0000

Change is pretty well the only constant when it comes to consumer payments. In Australia, we have seen a rapid uptake in contactless card use as well as increased use of online payments. Conversely, we have seen a rapid decline in personal cheque use as well as an ever-diminishing use of cash.

Monitoring changing payment usage can be notoriously difficult. The Reserve Bank of Australia (RBA) and APCA collect and publish statistics from industry participants on cheques, cards and electronic payments as well the number of ATMs and POS devices. However, other types of usage such as cash use and the split between card-present (point-of-sale) and card-not-present (internet, telephone and mail) transactions are more difficult to track. Consumers and merchants don’t regularly record or report their own payments activity – meaning we only get a partial picture of how payments use is evolving.

Payment costs in Australia – early observations from new RBA research

Brad Pragnell — Mon, 05 Jan 2015 23:23:41 +0000

With complex processes and multiple parties, determining the costs of payments can be difficult. In recent years, the Reserve Bank of Australia (RBA) has taken up the challenge and released a research report on the cost of payments in Australia. This represents a long-awaited follow up to research last done in 2006.

The most recent RBA report dated December 2014 draws upon data collected in 2013 from financial institutions, businesses and consumers and seeks to quantify the overall cost of payments and the cost of various payment methods. This includes both “resource costs” (the costs to the whole economy) and “private costs” (the costs borne by consumers, merchants and financial institutions respectively).

Australia, South Africa and mobile payments

Chris Hamilton — Tue, 15 Oct 2013 04:02:04 +0000

When it comes to consumer payments, the future is obviously mobile. But the "how" of mobile payments turns out to be rather complicated.

I recently had the opportunity to participate in the Annual Conference of the Payments Association of South Africa. Systemic comparison is one key benefit of such an experience. Here we have two resource-driven economies of roughly similar size, similarly large physical distances but markedly different population demographics. The retail payments systems are diverging, rather than converging. This highlights the obvious point that payment systems are shaped by people's habits, not by economics.

Consider, for example, some simple comparisons between bank account ownership and mobile phone ownership. According to the World Bank, Australia is one of the most heavily banked populations on earth, with a 99% banking rate in 2012 - that is, 99 out of 100 Australians over the age of 15 had a bank account in 2012. South Africa, by contrast, has a 54% banking rate, and therefore a large community that is still cash-based. Now let's look at mobile phones: the "phoned" rate in Australia is a healthy 106%; in South Africa, 135%. Yes, every person in South Africa has a mobile phone subscription, and every third person has two. If you suspect the interaction of these two comparison pairs leads to different payment evolutions, you would be right.

A health plan for the payment system

Chris Hamilton — Wed, 26 Jun 2013 06:15:48 +0000

Recent data shows Australian non-cash activity overtaking cash transactions for the first time. These days almost every economic act other than a small consumer purchase requires an electronic transfer of value through the payment system by card, direct credit, direct debit, BPAY or some other method. This means that the payment system has become to the economy what your arteries and veins are to you – critical for economic health. One might think, then, that keeping the payment system “fit” (that is, secure, efficient and competitive) would be the subject of a well-developed “health plan”. Curiously, in many countries this has not been the case.

ATM statistics – are we slipping back into our old ways?

Brad Pragnell — Wed, 26 Dec 2012 22:28:48 +0000

The introduction of ATM direct charging in March 2009 has been one of the more public experiments in consumer behaviour within Australian retail payments. With three and a half years of statistics now available, we are developing a clearer view of its impact.

On the supply side, direct charging has accompanied a rise in the number of ATMs. There were 25,000 ATMs in Australia in mid-2008 and now there are over 30,000.

Despite more ATMs, direct charging has also seen a contraction in the number of withdrawals, with a drop by about 30 million withdrawals between 2008-09 and 2009-10. While this decline coincides with the GFC, the average withdrawal amount rose slightly during this period - suggesting slightly fewer but slightly larger withdrawals from ATMs as a response to direct charging.

High value banknotes: are they really under the beds of older Australians?

Brad Pragnell — Wed, 21 Nov 2012 00:20:11 +0000

In September of this year, Peter Mair’s submission to the RBA Innovation Review Conclusions created a surprising media splash. Mr Mair, a former RBA official and current finance media commentator, suggested significant and widespread hoarding of $50 and $100 banknotes by older Australians. In the media frenzy that followed, Mr Mair further suggested that “the average pensioner couple could hold up to $50,000 in undeclared $50 and $100 notes to get access to the pension.”

Not surprisingly, these comments set off a media firestorm. The Minister of Finance Penny Wong commented, responding, somewhat tongue in cheek, that she hadn’t been looking under any pensioner’s bed for cash!

The coverage raises the issue of high denomination banknotes in Australia. Are we awash in high denomination banknotes in Australia? Is Australia out of line with its international peers? Where are all those $100 notes and what are they being used for?

The future of money

Chris Hamilton — Sun, 15 Jan 2012 04:30:34 +0000

Believe it or not, the current US Presidential nomination process has thrown up a passionate debate about the nature of money, and particularly whether it is 'sound' or not. Voters are frustrated and fearful about the economy. Politicians (with no economics training) are arguing that in these uncertain times we need a currency backed by something 'real' like gold.

This seems oddly backward-looking in the era of the internet. It begs a question: what sort of money do we need to fuel the economy of the 21st century?