A shocking trend among Australian consumers could be the clearest indication yet that a cashless society is only years away.
New data by Reserve Bank of Australia has revealed that the number of Australians paying by cash has more than halved since 2019.
Only 13 per cent of transactions in 2022 were done in cash, with the Covid pandemic and declining cash services partly to blame.
Instead, the research found consumers were increasingly using credit and debit cards – even for small, everyday transactions.
“Australians continue to shift away from using cash for day-to-day transactions,” the RBA reported revealed.
“Since the report was first conducted in 2007, the share of payments made using cash has declined in every subsequent survey.
“Cash made up about 70 per cent of payments in 2007, and only 13 per cent in 2022.
“It was also historically used more frequently for low-value in-person purchases.
“However, card payments have now overtaken cash usage even for these small purchases.”
The data, revealed in the RBA’s 2022 consumer trends report published in June, also sheds light on how Australians are spending their money.
Historically, consumers aged 65 years and older predominantly paid for items with cash.
The 2022 data revealed even they now mainly used cards, which accounted for two-thirds of transactions.
“Compared with 2019, the share of transactions made using cards rose most strongly for those 40 years and older,” the report stated.
“There was little change for those under 40, narrowing the difference between younger and older people.
“The increase in the use of cards for older consumers was strongest for low-value transactions.”
People aged 18-29 were the most “intense” users of cards, with about 85 per cent of transactions made on plastic.
The report also found that usage of debit cards had grown more significantly since 2007, as compared to credit cards.
Debit card payment, on its own, accounted for about half of all transactions in 2022; credit cards amounted to just 26 per cent.
As for how Australians were spending their limited cash, the report found in 2022 most often cash was used for leisure and services.
These transactions included services such as plumbing, hairdressing, and babysitting – traditionally cash-driven services, but less on transport.
The report found about 72 per cent of Australians were classified as “low-cash users”, with less than 10 per cent classified as “high-cash users”.
Rates remained fairly even among rural and urban households, while low-income families reporting the highest drop-off in cash use.
The usage of certain denominations also witnessed a shift with the number of high-value banknotes being kept in people’s wallets increasing.
The RBA report suggested the increase reflected “precautionary motives”, as well as inflation and the prominence of ATMs for accessing cash.
“The report suggests that many consumers perceive cash to be important as a back-up payment method,” the RBA stated.
“Of the people who held cash in their wallet in 2022, the most important reason for doing so was for emergency transactions
“Emergency transactions was also cited as the most important reason for holding cash outside the wallet, followed by giving cash gifts.”