SYDNEY (CU)_The COVID-19 pandemic has led to a major shift in payment trends in Australia, new data issued by the Australian Banking Association (ABA) shows. According to the country’s trade association for the banking industry, many Australians have abandoned credit transactions, as debit became the most popular mode of payment since the beginning of the global health crisis.
However, with many businesses moving to digital transactions only and consumers increasing purchases made online, cash transactions over the past year, which is measured based on ATM withdrawals, were found to remain well below pre-pandemic levels. Based on data issued by the Reserve Bank of Australia, the ABA concluded that debit transactions rose 17 per cent in 2020, in comparison to the previous year, although, cash transactions slumped 10 per cent. However, the increase in the use of debit cards was said to be matching the decrease in cash withdrawals.
“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,” ABA Chief Executive Anna 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.”
Moreover, the Association also found that many Australians were moving to other payment modes such as buy-now-pay-later schemes, which means that although some customers turned their back on credit cards, they still wanted some form of lending. On the other hand, data also revealed a continued decline in the use of cheques, which saw a drop by almost 40 per cent last year, and equating to less than 0.3 per cent of all payment transactions in 2020.
“We are moving towards a cashless society but we are a long way away yet,” 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.”
