Mobile Wallets Overtake Cash as Preferred Payment Method in Australia

A customer uses Apple Pay in Cincinnati, Ohio, on July 13, 2015. Duane Prokop/Getty Images for MasterCard

New research has shown that mobile wallets have overtaken cash as a means of transaction as more Australians have switched to digital payments in recent years.

The Australian Banking Association (ABA) on June 27 released a new report (pdf) providing an overview of banking trends among Australian consumers.

The ABA found that between 2019 and 2023, the value of mobile wallet transactions soared by 18 times to $126 billion (US$84 billion).

The figure was also higher than the total ATM cash withdrawals ($106 billion) for the first time.

Since 2007, the share of retail payments made in cash has plummeted with a nearly 10 percent drop each year.

In 2022, cash transactions accounted for less than 20 percent of retail payments, while the total value of cash payments fell to just 7.5 percent.

The decline in cash use was observed in all income and age groups during the period, regardless of geographic location.

“Some of the strongest decline has been in customer segments with historically high cash usage,” the report said.

Specifically, the 65+ age group reported the most significant change, with a 69 percent plunge in cash use since 2007.

In addition, the drop in cash use in regional and remote areas (80 percent) was higher than in major cities, resulting in little difference between these locations at present.

There was also a sharp fall in cash transactions for small-size payments.

In 2007, nearly 100 percent of payments of $1 to $10 were made with cash. However, this figure has slumped to just over 20 percent by 2022.

Along with payments, consumers have switched to online channels to interact with banks.

According to the ABA, 99.1 percent of interactions were now being made online or via apps.

On the other hand, banking branch interactions dropped by 47 percent between 2019 and 2023.

ABA CEO Anna Bligh said Australia was in the midst of “a digital banking boom.”

“Australians are interacting with their bank more than ever before thanks to the ease and convenience of digital banking,” she said.

“They are banking whenever and wherever it suits them.”

ABA Assures Consumers About Cash Availability

While Ms. Bligh acknowledged the rapid growth of digital banking, she assured consumers that banks would continue to support cash transactions and face-to-face banking services.

“This report shows that Australians are using less and less cash, but we’re not about to become cashless anytime soon,” she said.

“Banks still maintain a strong branch network, with Australia still having a higher branch density than the OECD average, complemented by the availability of face-to-face services at over 3,500 Bank@Post locations around the country.”

As of 2022, Australia’s bank density was 19 branches per 100,000 adults.

Despite the ABA’s claim, Australian commercial banks still push ahead with branch closures, raising concerns among consumers.

Data from the Australian Prudential Regulation Authority showed that 424 bank branches and 718 ATMs were closed during the 2023 financial year alone.

Since July 2017, there has been a 37 percent drop in the number of bank branches across the country.

In a related development, the Banking Code Compliance Committee (BCCC) has publicly sanctioned Westpac Bank for “serious and systemic breaches” of the Banking Code of Practice after the closure of its branch in Tennant Creek, Northern Territory.

The BCCC found that Westpac Bank failed to provide adequate customer support after shutting down the branch, leaving around 3,400 local residents without access to some of its banking services.