Not too long ago, the idea of buying your supermarket shopping with your phone was unthinkable. Today it’s a reality—and one that is not going anywhere.
From growing WiFi coverage to improved digital wallet services, it is clear cashless payments is not just a passing fad. Here are just three reasons why:
1. Growing customer demand
Cashless payments are no longer an unfamiliar or disruptive innovation. Since their introduction into the Australian market, cashless payments have become a normal part of everyday life. According to a report from RFi Group, 59 per cent of Australians used cashless “tap and go” cards to make a payment in 2016—one of the highest rates in the world.
The widespread adoption of “tap and go” cards is also reflected in the rising use of digital wallets. Last year, a Mastercard Mobile Shopping Survey found that the number of consumers in the Asia Pacific who use digital wallets jumped from 9.7 per cent in 2014 to 19.5 per cent in 2016, meaning almost one in five consumers have a digital wallet.
Indeed in 2015, four in five smartphone users in Australia already believed making payments via their phones would become the new “norm”, according to the Westpac Cash Free report.
These figures all point to one conclusion—cashless payments are a popular, mainstream option for the majority of Australian consumers.
2. Improved technology and services
The growth of cashless payments has been tempered by the advance of technology. But as technology catches up with demand, the service is expected to become even more popular.
Advances in wireless technologies like WiFi and Bluetooth will make it easier for consumers and businesses to use cashless payment systems, widening access and improving coverage.
The same goes for cashless payment services. For instance, while Apple Pay may have arrived in Australia in 2015, it initially only worked with American Express cards. Now ANZ along with 47 other Australian financial institutions are compatible with the digital wallet.
Other initiatives like the New Payments Platform, which allows customers to send money in real-time outside of business hours, also promotes growth in the cashless payment industry. Just as changes to regulations like the reduction of credit card fees and the roll back of minimum spend on purchases will make it more convenient for consumers to pay without cash.
3. Changing customer behaviour
As well as the improvements in technology and cashless payment services, customer behaviour is also changing in favour of cashless transactions.
To begin with, Australians are increasingly looking to online stores to fulfill their shopping needs. In 2016, online retail sales topped $20 billion for the first time, according to the National Australian Bank. What’s more, 84 per cent of smartphone users who do shop in a store use their phone to help them with their purchase selection, as reported by Google’s 2013 Mobile In-Store Research.
Australians also depend less on ATM withdrawals. According to the RBA, ATM withdrawals hit a 13 year low in 2017, with customers choosing cash over card.
Cashless payments are an important part of the future of the fintech industry. When reviewing the across-the-board support from customers, financial institutions and even government bodies, it is clear that cashless payments are here to stay.