ATM withdrawals have slumped to their lowest levels in 15 years and the number of Australians taking cash out during debit card transactions is falling at the fastest annual rate on record.
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The new figures provide an insight into the wider shift towards a cashless economy, as electronic payments such as Paypass transform habits and consumers shy away from ATM withdrawal fees and bricks-and-mortar branches.
According to Reserve Bank of Australia figures released on Monday, the number of ATM withdrawals in January fell by 7.7 per cent compared to last year. The total value was down by 3.9 per cent. It follows two consecutive years of ATM withdrawals falling by more than 6 per cent.
"Cash is no longer king," said CommSec chief economist Craig James. "Use of both credit and debit cars is soaring with more people using the cards for small purchases."
The RBA's credit card figures also showed the number of transactions were at 13-year highs, while the average credit card balance declined by $84 to $3083.30 in January
"The versatility of tap and go has caused people to use cards more often for smaller transactions but credit-card debt is still falling, compared with a year ago at a time when wages are up near 2 per cent," said Mr James.
The sharp drop in cash withdrawals has hit as the RBA prepares to roll out its $1 billion real-time payments platform this year. Under the new system, BSB and account numbers will be ditched in favour a uniform, simplified electronic payments system.
The shift will mean consumers and businesses are able to transfer funds between each other instantly, eliminating up to three days' waiting time that occurs when people transfer between banks and any delays on public holidays or weekends. ???
"It's about time this happened," said Regal Funds Management bank analyst Omkar Joshi. "If you are going to dinner with mates you want to be able to split the bill in real time."
When the system comes online in the second half of this year, Australia will be one of three nations that has real-time payments behind Sweden and Mexico. ATM use in Sweden has been in rapid decline, falling at 4.4 per cent per year since 2007.
Mr Joshi said despite the fall in the number of ATM transactions it is unlikely Australia will see a widespread pull-back of branches or ATMs.
"Banks don't save any money because they've already paid for the ATMs," he said. "And you would not want to be the first bank to scrap them and have customers at your store protesting."
Mr Joshi said there had been a lot of discussion about branches disappearing. "But what if you want to get a home loan? You still walk into a branch," he said.
