Sun is setting on Aussie cash as consumers spend

15/08/2013

Consumers are now spending three times as much on their credit and debit cards as they withdraw in cash, as the relentless drive to a cashless society accelerates, according to the latest Reserve Bank of Australia statistics. Australians used their ‘fantastic plastic’ to pay for $444 billion worth of purchases in 2012-13, compared with $164 billion for ATM and eftpos cash withdrawals.

Credit and debit cards accounted for 79.6% of all transactions in 2011/12, rising to 81.8% in 2012/13. This compared to a fall in ATM and eftpos cash withdrawls from 20.4% to 18.2% over the same period. Independent eftpos provider, Tyro Payments, said Australian consumers were increasingly moving away from cash as online, tablet, mobile and contactless payments systems replaced the old way of thinking.

“We are approaching a tipping point for the end of cash as we know it,” says Jost Stollmann, CEO of Tyro Payments. “It is conceivable that we are not far off when consumers leave home entirely without cash, armed only with a credit or debit card to pay for anything from a package of chewing gum to a new car. With the number of EFTPOS terminals Australia-wide having grown to almost 780,000, consumers can use ‘tap and go’ technology more conveniently than fumbling for notes and coins. PINs, signatures and receipts are all a thing of the past for small ticket purchases below $35 or contactless payments up to $100. Cardholders simply hold their card against a special contactless reader to wave and off they go.”

The contactless cards reduce the standard waiting times at busy check out queues to as little as 6.4 seconds [1]. Supermarket group Coles reports that over half of all its credit card transactions are now made using contactless payments [2]. Mr Stollmann said the revolution in how Australians paid for things was accelerating.

Australians used their credit and debit cards a whopping 5.1 billion times in the last 12 months [3]. For retailers like fast food restaurants, petrol stations, convenience stores, pharmacies, and others it makes good business sense: the faster the payment at checkout, the shorter the queues and the less purchase abandonment.

With fewer cash transactions and cash on the premises the risks of robbery and slippage decline and so do the cash handling costs. And there is more to come.

A wave of new players is rethinking and integrating the shopping and payment experience in dramatically new ways. Vend, Kounta, Revel, Lightspeed, Lavu and others have built portable, inexpensive cloud and touchscreen based point-of-sale systems on iPad and tablets that offer a better customer experience and significant lower cost of ownership than the incumbent systems do.

Mr Stollmann said the stakes were high when such tectonic shifts occur. “We expect the number of electronic payments to grow strongly as cloud-based technology advances and the new smart phones and devices become more popular. For Tyro this spells great opportunity, since we brought EFTPOS into the internet world. We use cloud architecture today for our totally reliable payment platform. Currently we hire as many top java engineers as we can to double our development capacity.”

The battle for displacing cash is heating up.


[1] Dhun Karai, Group Head Financial Services Woolworths at Cebit’s Future of Payments Conference
[2] http://australia.blog.visa.com/2013/04/18/contactless-payments-take-off-at-coles/
[3] http://www.rba.gov.au/statistics/tables/#payments_system

 

 

 

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Christine Kardashian
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