MasterCard has revealed in a new global report “The Cashless Journey” that Australia is a global leader in moving towards cashless payments. The Cashless Journey report tracks how 33 major economies are progressing from cash-based to cashless societies.
In Australia, cash transactions account for less than 15 per cent of consumer payments, leading other major global economies including China and the United States where cash payments represent 45 per cent and 20 percent respectively. The most cash dependent economy in the study is Egypt, where only seven per cent of transactions are non-cash payments.
Ranked among the top six countries in the world that have been dubbed ‘nearly cashless’, Australia – along with Belgium, France, Canada, Germany and Sweden – has been shrinking the share of cash in circulation for many years now, with further reductions to cash usage expected. One reason for Australia’s advanced position in payments is its nearly comprehensive financial inclusion, with 99 per cent of Australians over 15 years of age possessing bank accounts.
MasterCard Australasia Division President, Eddie Grobler says the data illustrates how eager Australians are to adopt new technology, and free themselves from the inconvenience of cash.
“Australian consumers are savvy as they know that cashless payments are more convenient and safer than withdrawing and carrying cash, the numbers speak for themselves. We’re in an exciting position where a cashless future is a genuine possibility for Australia. Through the advancement of contactless payment options like MasterCard PayPass™ and digital wallet technology, we’re getting ever closer to realising it.”
While the study shows Australia is ahead of the pack globally it is evident there is still work to be done, particularly in capturing low value payments. Cash accounts for less than 15 per cent of the total value of consumer transactions, but it still equates to nearly 70 per cent of the total number of transactions.
“Consumers are becoming more and more comfortable making transactions using their cards in-store and online. The challenge now is educating Australians that small purchases like heading down the road to grab a coffee and a paper can be made with greater convenience by leaving the cash at home,” said MasterCard Australasia Division President, Eddie Grobler.
The Cashless Journey study also identifies new technologies, government programs and consumer preferences as key factors driving this shift to a world beyond cash.
Additional key findings of MasterCard’s report include:
- Of the $63 trillion (USD) in total global consumer spend in 2011, 34 per cent ($21 trillion USD) was done with cash, with cashless payments accounting for 66 per cent ($42 trillion USD).
- The report identifies Belgium (where an estimated 93% of the value of consumer spend was cashless), France (92%), Canada (90%), the UK (89%), Sweden (89%), Australia (86%) and the Netherlands (85%) as the countries where cashless payments are nearly ubiquitous, and attributes these nations’ broad movement away from cash to the uptake of new payment technologies such as mobile, contactless and EMV Chip and a modern payments infrastructure.
- While countries including the United States (where an estimated 80% of the value of consumer spend was cashless), Singapore (69%) and Brazil (57%) are considered to be approaching a “tipping point” to becoming nearly cashless, emerging economies such as India (32%), Russia (31%) and Nigeria (10%) are just embarking on their cashless journey – in many cases they are shifting cash share at a faster pace than their more developed peers thanks to factor such as a growing middle class.
- Japan, Korea and Singapore are slightly less far along in their journey than Australia and are at a tipping point where the right measures can move them to the final stages of the journey. Although Japan seems to have plateaued in its progress, Korea and Singapore seem to be on track if they continue with their current cashless initiatives. To accelerate the Cashless Journey in these countries, consumer attitudes and behaviors towards cash usage need to be well understood and accommodated
The “Cashless Journey” report measure nations’ progress towards more modern, efficient payment processes by looking at the current share of cash versus non-cash payments for consumers (Share), how this share has shifted in the past five years (Trajectory), and whether conditions exist for cash payments to move to electronic (Readiness).
The report measure three components of progress:
- Share: the percentage of the value of all consumer payments (including utility, government, medical, loan, P2P payments for goods or services as well as merchant payments at retail point of sale) that are presently done by a means other than cash
- Trajectory: a measure of the shift in cash share of consumer payments’ value between 2006 and 2011
- Readiness: a measure of the future potential for conversion of cash payments to electronic payments