Use of cash and cheques declining says RBA

Cash is falling out of favour, the use of cheques is almost non-existent, debit cards are gaining, but Australians haven't quite made the leap to paying by mobile phone, the central bank says.

The Reserve Bank of Australia (RBA) is conducting a strategic review of the payments systems, due for release mid-year.

RBA Assistant Governor (financial system), Malcolm Edey, says an important part of the review is the study of 1200 households conducted over October and November 2010.

Edey says the use of cash has declined since the previous study in 2007, especially in its share of traditional payment methods, falling to about 30 per cent from 40 per cent.

"Debit cards appear to have been substituted for cash, with scheme debit and EFTPOS transactions both gaining share," he told the Cards and Payments Australasia 2011 Conference in Sydney on Tuesday.

The use of cheques is falling out of favour, with fewer than 40 per cent of the study's respondents saying they had made a payment by cheque in the past year.

Over a third of those said they paid by cheque because there was no other alternative and a quarter said they used a cheque so there would be a record of payment.

In contrast, more than 80 per cent of those surveyed said they had made an online purchase and almost 60 per cent reported making an online transfer of funds.

A total of 60 per cent of the study's respondents also said they paid most of their bills online.

On the issue of contactless payments and mobile payments, only three per cent of respondents said they had made a contactless payment in the previous month.

Where they had, the main purpose was for phone-related purchases such as ringtones or games.

Most of the other mobile payments made were effectively internet payments made using a smartphone.

Edey also noted the slow development of electronic purse systems, prepaid card such as Oyster in London and the Octopus card in Hong Kong, which are used in public transport ticketing systems, but can also be used in stores.

"The question once again is whether there is a significant impediment to development of these systems in Australia, given the already high use of payment cards," Edey said.

One of the central bank's roles is to promote safe and efficient payments systems for consumers and businesses.

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