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Are card and online payments trumping cash?

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It is said cash is king, and while it remains so for many Australian households and businesses, non-cash and online payments are on the up and up. According to research from Bankwest, the frequency of non-cash payments has increased by eight per cent in the year since November 2010, and a whopping 45 per cent over five years.

In fact, over the year, more than 7.1 billion retail non-cash transactions were made in Australia, equivalent to 311 non-cash retail transactions per person.

“There is a clear long-term trend away from cash payments as Australia’s households and businesses choose card-based and online methods for their puchases and payments,” says Bankwest Business chief executive Ian Corfield.

Debit cards lead the pack as the favourite method of non-cash payment for smaller transactions, and have experienced the fastest growth over any other transaction type in 2011. Over the year, debit cards accounted for more than 2.6 billion transactions with a total value of $155 billion. This is up 14 per cent on 2010 and 81 per cent over five years.

The number of credit card transactions has also increased despite consumer conservatism, rising six per cent over the year. Credit cards account for 61 per cent of online purchases.

“Although households are cautious about raising their debt levels at the moment, the number of credit card purchases continues to rise,” says Corfield. “Credit cards are the most popular way of making online retail purchases, with nearly two-thirds of online purchases made using a credit card.”

Online payments have also increased and, according to Reserve Bank data, make up 17 per cent of all non-cash retail payments. Australian businesses received internet orders during 2009/10 worth an estimated $148 billion. And, businesses are also increasingly going online to place orders, with 73 per cent of large businesses and 40 per cent of businesses with less than four employees using the internet to purchase goods and services.

“Consumers and also businesses are looking for the convenience of online payment systems. To meet this demand and to remain competitive, SMEs need to adapt to an increasingly online world,” says Corfield.

The number of cheques being used as payment has dropped significantly – over 2011, there was a 12 per cent drop and over the past five-year period, 42 per cent less cheques were being written.

“The use of cheques is in sharp decline and we would not be surprised to see them fade out over the next decade as households and businesses become more reliant on electronic payment methods for their higher value transactions,” says Corfield.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, February 01, 2012

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