COVID-19 has accelerated the use of debit cards, while cash and credit cards are increasingly falling out of favour, according to a new Australian Banking Association (ABA) analysis of data from the Reserve Bank of Australia (RBA).
The report shows debit cards are Australians’ clear choice of payment method, outweighing credit cards by almost three times, while the use of cash has significantly declined.
Debit card use rose 17% in 2020, in comparison to cash withdrawals, which fell by 10% in the same period, while cheques made up less than 0.5% of all transactions.
ABA chief executive Anna Bligh said that while debit card usage had been increasing over the last decade, it had accelerated as a result of the pandemic.
“Debit cards continue to be the number one choice when Australians purchase something in person or online, and that means the majority of us are paying with our savings instead of credit,” Bligh said.
“This trend hasn’t always been the case. In 2006, Australians used credit and debit cards equally. Twelve years later in 2018, Australians used debit cards at almost double the rate of credit cards, and just three years later it’s almost triple.”
Ten years ago, debit cards made up 44% of all transactions, which has now increased to 71%. Credit cards made up 32% and have now declined by 7% to a total of 25%.
The increase in debit card use is matched by the decrease in cash withdrawals, reflecting the decline in cash transactions in Australia.
“Unsurprisingly, particularly due to stores encouraging cashless transactions throughout the pandemic, the use of cash declined a further 10% on the previous year, which is another sign of Australia moving closer and closer to a cashless society,” Bligh said.
“Australians love new technology. More and more of us are doing our banking online or through apps, and we can expect the use of cash to continue its decline in 2021 and the future.”
The use of cheques fell by almost 40% in 2020 and equated to less than 0.3% of the year’s total payment transactions.