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Australia’s Evolving Payments Landscape

by | Feb 17, 2022 | Blogs

smiling woman paying via credit

The way Australians pay has changed significantly over the last decade, with more and more of us opting to pay electronically. The 2021 Payments System Board Annual Report identified a number of emerging trends and developments in retail payments.

1. Electronic payments are the future

Cashless payments were already surging in popularity before the COVID pandemic dramatically accelerated that trend. Today, cash payments are somewhat of a rarity, and the use of cheques for consumer payments is almost unheard of.    

According to the Reserve Bank of Australia (RBA), Australians made an average of 625 electronic transactions during 2020/21, compared with just 275 a decade earlier. Interestingly, Australians increasingly prefer to use debit cards rather than credit cards, with around 75% of card payments made via debit card (up from 60% ten years prior).

2. Both consumers and merchants are less interested in cash

The use of cash for day-to-day payments continues to decline. COVID has seen consumers reluctant to use cash for face-to-face payments and merchants less willing to accept notes and coins over the counter.

While most retail businesses continue to take cash payments, an RBA survey found that in late 2020, 45% of consumers had encountered a store that didn’t accept cash. Likewise, people are withdrawing less money, less often from ATMs – withdrawals fell sharply in April 2020 as the first wave of the pandemic hit and have only partly recovered since restrictions were lifted.  

Unsurprisingly, older Australians estimate that more than half their payments are in cash. Cash will continue to be an important and preferred payment method for certain people into the future, despite its decline in popularity.

3. Innovation is reshaping the payments landscape

New technology is having a significant impact on payments in Australia. Our fast payments system, the New Payments Platform (NPP), was launched in 2018 and allows consumers and businesses to make real-time payments 24/7. Many banks and payment service providers are even supporting payments being sent to an account owner’s registered mobile phone number, email address or ABN rather than to a traditional BSB and account number.

PayTo, developed in partnership by NPP and the financial services industry, is another new, digital way for merchants and businesses to initiate real-time payments from customer bank accounts. The platform goes beyond being a simple alternative to direct debit by enabling the linking of bank accounts for in-app purchases, account-on-file arrangements for ecommerce and subscription services, and funding for digital wallets and other payment options including ‘buy now, pay later’ services.

‘Buy now, pay later’ (BNPL) options like Openpay and Afterpay are another recent innovation in retail payments. The RBA estimates that BNPL providers processed more than $11 billion of purchases in the first half of 2021. International payments are also experiencing rapid innovation.

New entrants continue to expand the payment options available to consumers and businesses, with an increasing share of contactless payments being made through mobile wallets from Apple, Samsung and Google. With mobile phones now the tool of choice for Australians to display their vaccination certificates, they’re usually already in hand when people are in retail or hospitality venues. A report prepared by the Commonwealth Bank of Australia (CBA) found that the value of monthly transactions made using mobile wallets had more than doubled in the 18 months to May 2021.

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