The Reserve Bank of Australia recently published the results of a survey in 2013 reflecting on the use of cash in the Australian economy.
Here are a couple of the key charts from the survey.
This chart shows the percentage of transactions where cash was used, for varying transaction amounts.
The blue bar shows the results from 2007, yellow bar shows 2010 results and the green bar shows the latest results in 2013.
It is clear from looking at this chart, that cash is the dominant payment method for transactions $0-$20, although less dominant than 6 years ago.
What is most interesting is that for transactions greater than $100 - cash is used only 13% of the time.
The next chart shows the share of transactions in dollar value, where cash was used to pay.
This shows that cash as a payment method has declined dramatically since 2007 and that cards and internet/phone payments now account for over 70% of transactions.
The final chart shows the share of payments by age group. (measuring number of transactions not value)
While there remains a preference of of cash for older Australians, the trend of using cash less is clear.
Summary
Results from the 2013 Survey of Consumers’ Use of Payment Methods indicated that cash remained the most frequently used payment method for day-to-day transactions, though its use relative to other payment methods has declined over recent years. Age was an important factor in determining preferences for the use of cash, with older participants more likely to use cash than younger participants. Consistent with previous surveys, participants were more likely to use cash for low-value transactions relative to other payment methods. Given the continued preference for cash of older participants in the survey, and the dominance of cash for low-value transactions, these results suggest that cash is likely to remain an important part of the payments system for the foreseeable future.
What does this mean for investors?
There is clearly a change in the use of cash in Australia - which is also taking place around the world. When thinking of the companies behind alternative payment methods the following names should come to mind - Paypal (owned by eBay), Visa, Mastercard, American Express. It is no surprise to see these names appear in International investment portfolios. Yet another reason to spread investment beyond Australian shores.