Cash no longer king in Australian retail
Just 6.6% of all payments to Australian businesses were made with cash during 2017, research from business banking research and analysis firm East & Partners indicates.
The proportion of payments made with cash has slumped 56% since 2012, a survey by the company suggests.
Credit card payments at point of sale have fallen 20% over the same period, while online payments have surged 184% and payments made using bank issued debit cards have grown 78% to represent nearly a quarter (24%) of all transactions.
"Cash has well and truly lost its mantle as king," East & Partners Head of Markets Analysis Martin Smith said.
"The emergence of contactless, mobile and wearable payment technology has pushed the preference for debit and credit cards beyond cash usage, as more consumers opt for those for lower value purchases."
The company's findings align with ATM withdrawal figures released by the Reserve Bank of Australia last March, which indicate that 7.7% fewer withdrawals occurred in 2016 compared to the prior year.
As a result of the changing purchasing habits, merchants report that their key payment platform investment priorities over the next two years are internet payment platforms as well as mobile payments.
Meanwhile, changes to the Reserve Bank of Australia's surcharging rules have driven down the number of merchants planning to apply a surcharge in 2018 to less than 12%, with one in three merchants having no current plans of applying a surcharge.
But merchants are seeking other ways of recouping the cost of card acceptance, with 58.5% publishing an explicit transaction or booking fee, with 40% bundling the acceptance costs into increases of product pricing.
"The changes instigated by the Reserve Bank, which fully came into effect in September 2017, have clearly worked and are benefiting retail and business customers alike," Smith said.
"As they face tightening margins, payment service providers must ensure that they are providing businesses customers with best-of-breed service and technology features to attract new customers, and ward off ever increasing competition in the market."
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