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How cash is officially dead in Australia – the Reserve Bank issues a grim warning about the dangers of tap-and-go
Only 13 percent of transactions are in cash
This increases the threat risk for payments
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Cash transactions are dying in Australia with only 13 per cent of purchases now using banknotes or coins – making hacking a real threat to everyday life.
Tap-and-Go card and mobile payments and direct online transfers make up the rest of all transactions, with the share of cash purchases halving in just three years.
Resources are being deployed to protect the resilience of electronic payments – Ellis Connolly, RBA’s head of payments policy, said – mentioning the word ‘security’ six times in a letter without specifically mentioning the risk of cyber vandalism.
“More than ever before, Australians rely on electronic payments, so retail payment systems need to be secure and resilient,” he said in an interview with The Australian Financial Review Banking Summit on Tuesday.
Cash transactions are dying out in Australia with only 13 per cent of purchases made using banknotes or coins – making hacking a real threat to everyday life as more and more people use cards and mobile payment methods (pictured in Sydney shop sign)
Historically, the RBA has overseen the integrity of payment systems handling high-value payments to key financial market infrastructures, given the potential for stress to spread through the financial system.
“The dominance of cards and the consumer shift to mobile raises some important issues within the RBA mandate.”
The Reserve Bank estimated that only 13 percent of transactions in late 2022 were in cash, which is half in just three years since the start of the pandemic.
New Payments Platform was created in 2018 to enable Australians to make direct transfer payments 24 hours a day.
Since that time, cash purchases have become less popular.
The Reserve Bank estimated that only 13 percent of transactions in late 2022 were in cash, which is half in just three years since the start of the pandemic.
Contactless plug-and-play payments, where the customer uses their mobile smartphone, accounted for a third of transactions, and younger consumers are more likely to pay this way.
This is growing at the expense of the tap-and-go card method, which has fallen from more than 70 per cent to just over 60 per cent over the past three years, according to the RBA Consumer Payments Survey.
Card transactions – which cover plugging in, moving around and inserting into a machine – still make up three-quarters of transactions.
Half of all transactions in Australia are by debit card and a quarter by credit card.
Until 2007, cash transactions accounted for two-thirds of all payments in Australia.
Card transactions – which cover tapping, navigating and entering into the device – still make up three-quarters of transactions (stock image)
Contactless plug-and-play payments, where the customer uses their mobile smartphone, accounted for a third of transactions, with younger consumers more likely to pay this way.
“Fifteen years ago, almost all personal card transactions were made by inserting the card into a terminal and providing a signature or PIN for verification,” Connolly said.
“These days, transactions basically just involve tapping a card or a mobile device that securely stores the card details.”
By 2021, Australians were the most prolific card payments users in the world, with a per capita share of them overtaking South Korea, the United States, the United Kingdom and Sweden.
Connolly said the Reserve Bank was focused on cutting costs for wholesalers.
Consumers pay 0.55 percent on average with each transaction.
“Merchants having the option to recover their payment costs by charging additional fees has put competitive pressure on card networks and payment service providers to reduce their fees,” he said.
“However, the cost of card payments can still be significant for small businesses.”