The value of Australia’s retail payments system

Payment systems are an integral part of modern economies, facilitating transactions between customers and retail businesses. Used by almost every Australian each day, these networks and arrangements enable movement of money from a payor to a payee through intermediary financial institutions, or value exchange of a physical or digital nature. They are critical economic infrastructure for the functioning of markets.

Australian businesses offer a variety of payment options to customers

The payments mix - the range of methods with which payments are made – is rapidly evolving. Consumers and businesses are consistently choosing cards and electronic payment methods over cash and cheques. Together, debit and credit cards are used in the majority of retail transactions. In 2023, Australians had almost 63 million debit and credit cards on issue, supporting over 1 billion transactions per month (which were worth almost $35 billion a year). The government has signalled its plan to phase out cheques by 2030. Further, according to the RBA, only 13% of transactions (worth 8% in value) used cash (in 2022) with the share of in-person cash payments by number declining by half since 2019. Of course, there is still a clear place for cash in the wider economy, with Australians generally feeling it is necessary to hold cash for emergencies and for privacy and security. The RBA has also noted that despite cash usage declining, it places a high priority on the community having reasonable access to cash.6 Nevertheless, the increased digitalisation of society has made electronic payments the clearly prevailing option.

Most Australian businesses provide customers with a variety of payment options. Data from the survey reveals that of 17 payment options, small- to-medium sized businesses generally offer around 6 different options on average. Large businesses (with more than 200 employees) offer 7.5 on average. These businesses are responding to the rapidly evolving consumer preferences, which have shifted from cash (which represented nearly half of all transactions ten years ago), to cards, and in recent years, digital wallets, which has seen a significant increase in usage in the past three years.

As indicated in the chart, electronic payment forms (such as debit and credit cards, or digital wallets) tend to make up the majority of transaction value. This is particularly true as businesses become larger. 

While large businesses tend to offer a wider variety of payment methods than smaller ones, the size of the customer base and preferences towards more ‘conventional’ payment methods may lead to a large share of transaction value being made via electronic payment methods.