Australians lose more than $200 million a year by paying with cards over cash

Australian business owners pay around $4 billion in service fees to banks and card issuers a year.

Source: Kay Steadman, ABC News, 26 December 2018, based on data by the RBA

Average cost of EFT(POS) transactions to merchants:

  • Eftpos debit: 0.25 per cent per transaction amount
  • Visa and Mastercard debit: 0.55 per cent 
  • Visa and Mastercard credit: 0.8 per cent
  • American Express 1.41 per cent
  • Diners Club 1.79 per cent
  • Australian business owners pay around $4 billion in service fees to banks and card issuers a year.
  • Imagine how much money business owners could save in payment service fees to banks by switching to ATMs and cash for payment.

"When you tap a credit card on a machine, you don't really live that experience of parting with money."

Dr Subrato Banerjee, a behavioural economist at QUT Business School

"When you're paying cash at the counter, you're living the experience of parting with money in front of your eyes, which makes you conscious that money is going out of your pocket", states Dr Banerjee in this ABC article. Further, ABC's Emily Stewart, the author of the article, suggests going "back to using cash and allocating a certain amount to each area of spending...You could separate the cash in envelopes or just in sections of your wallet. That way you can clearly see how much you've planned to spend on groceries or luxury items, and you're less likely to overspend".
Ms Metz who was interviewed for the article said that using cash "it's a form of budgeting...It's what our parents used to do when they received their pay in cash. They divided the money into bundles".

In another ABC article, consumer psychologist Adam Ferrier confirms Dr Subrato Banerjee's view on how using cash helps people with their budgeting:
"If you have to reach for cash and count it out, that could turn someone off a purchase. In a frictionless system like tap and go, there is less time for people to reconsider the purchase, so they [consumers] are more likely to spend more.

When saving money matters to you.

Using cash is one of the greatest things you can do to kick-start your savings.

ABC published a very interesting article on 7 August 2018 outlining seven saving tips. You can read the whole article by clicking here.

Payments. Untracked.

Cash remains the only truly anonymous payment method.

Despite Australia's embrace of new electronic ways to pay for small purchases, there are too many Australians who do not trust the new payment technologies. Apart from security concerns, many Australian consumers fear the ever increasing erosion of their privacy that goes with electronic, including contactless, payments and the accompanying ubiquitious corporate surveillance by big data corporations tracking every single cashless purchase in order to build  consumer behaviour profiles. 

32,000 ATM machines in Australia

The total number of ATMs in Australia fluctuates between 31,000 and 32,000 each year. The number of ATMs has remained steady for the last 8 years, despite the popularity of contactless payments in Australia, Many financial services experts predicted in the early to mid 2010s that there will be a precipitous fall in the number of ATMs as a result of the popularity of contactless payments. Those dire predictions did not come to pass. We are here to stay as an industry, because 3.75 million Australians still pay in cash every day.

(Source: Australian Payments Network, 2018)

Confidence in cash

"It seems the Reserve Bank of Australia, for one, is pretty confident that ‘real’, physical money is sticking around for some time yet,"

"The RBA has begun developing and issuing a new style of Australian banknote, starting in 2016 with the release of a revamped five-dollar note. There’s always plenty of discussion, and sometimes controversy, about the design and appearance of a new banknote, so the behind-the-scenes science and innovation can sometimes play second fiddle. In the case of the polymer banknote, it’s a uniquely Australian story."
Australian Academy of Science

The new $5 note.

Check out the new security features.

The new $10 note

Check out the new security features of the new $10 note.

The new $5 note is considered a scientific wonder.

Watch the video to find out why.

The Future of Cash is Defiant.

Overall demand for cash in Australia remains strong.

While the number of cash transactions has decreased in recent years, the amount of cash in circulation has grown. Domestic and foreign consumers  continue to use cash for payments for smaller purchases in Australia and also as a store of wealth. In times of economic and financial uncertainty, cash is considered a superior store of value to money held in bank accounts. According to the RBA, the overall demand for cash measured by the number of banknotes in circulation increased by 6 percent in 2016. There are currently 1.5 billion Australian banknotes in circulation, worth $73 billion.

3.75 million Australians are staunchly cash-centric.

Fifteen-percent of respondents in an Australian market research stated that they paid for all their small purchases in cash.* "The Evolution of Cash: An Investigative Study", Sydney: Australian Payments Clearing Association, 2014).

On 4 July 2018, the ABC published an article on the closure of the last bank branch on Lefevre Peninsula, South Australia, angering the local community. One local businessman was quoted in the article saying that "the elderly people still live in a cash society and won't be able to get their cash out and will be restricted in what they can spend". The chief executive of the Council on the Ageing in SA, Jane Mussared, said in the same article that "an increasing number of older people were on 'the other side of the digital divide' and were struggling with many of the new payment technologies.

More than 100 regional bank branches have been closed in the last 16 months, with a devastating effect on businesses in small and remote Australian towns.

Most of the articles you read about cashless society in the media are based on "research" that can not bear a rigourous scrutiny of a well designed academic study. For many of these media articles, the "research" consists of interviewing 5 to 10 businesses in inner city areas of Sydney or Melbourne (hardly a true representation of the breadth of businesses across  the whole country). A lot of these articles are funded by companies with vested interests in cash disappearing as a payment method from the Australian payment ecosystem. 

The media outlets who publish these articles do not declare that in reality you are reading an advertisement for a company developing one or another app for cashless payment, who are happy to share with you their wildest dreams and hopes. There is a PR war declared on cash, even from quarters who by statutory rules of their own organisations should remain payment technology neutral.  Even the more reputable market research studies on the topic show flawed methodology, unrepresentative samples, biased choice of respondents for their studies, surveys designed with leading questions that produces certain wanted results by those who fund the studies.

The number of ATM transactions and inquiries in our business show a very different picture. In the end, you as the business owner or manager decide how you want to be paid, a fact forgotten by those players in the payment industry who want to make you believe that you are powerless to drive your own customers' behaviours in your own business.

(Source: "The Evolution of Cash: An Investigative Study", Sydney: Australian Payments Clearing Association, 2014). 


When privacy in payments matters to your customers.

Did you know that a significant proportion of parking and speeding fines in Australia are being paid in cash, because many Australians prefer that family members do not find out about their fines?  Just one among the hundreds of legitimate reasons why Australians want many of their payments to remain private.

Is it a bit cheeky?

"For  the financial services industry to foist a new payment technology on consumers without giving us a chance to opt out?" (Choice, 2015)

"That's what happened when credit card giants Visa and MasterCard launched tap-and-go payWave and PayPass, respectively, starting in about 2009. Some consumers are still miffed at being denied a chance to say no to their credit and debit cards having the 'contactless payments' technology..." 
Choice's Andy Kollmorgen has written a very interesting analysis about the powerful commercial interests that are behind the uptake of contactless payment technology in Australia. Is it safe? 

Should consumers have the right to opt out of the technology?  

These powerful payment players have vested interests in seeing cash disappear as a payment method. Australia is one of the very few developed economies to embrace contacless payments with such enthusiasm. Consumers in countries like the USA, Germany, France, Austria and many other developed countries have been far more skeptical about the benefits of the new payment technology. 

One reason for the uptake of contactless payment is  due to consumers not having the choice to opt out from the contactless payment technology on their cards. Another  reason for the popularity of the contactless payment technology is the absence of direct POS transaction charges to consumers. For the time being, most merchants pass on the cost of card payments to consumers in other ways. 

While many consumers believe that there is no cost to their contactless card payments, the reaility is quite different as shown in a December 2018 article on the ABC.

The Price of Choice and Convenience

The story behind pricing in the ATM industry

Click on the button below to read our submission to the Treasurer's ATM Task Force in 2012

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