The Government recently announced that the Australia’s payments system is set to undergo a radical transformation. One of the key changes in the plan is the phasing out of cheque payments. Cheques will be gradually wound down by 2030, with the removal of legislation and other requirements that currently support its use. The use of cheques has been on a steep decline, with a decrease of almost 90% in the last decade, now accounting for just 0.2% of non-cash retail payments in Australia.
In conjunction with this announcement, the government has introduced a comprehensive payments strategy, encompassing regulatory changes, heightened security measures, cost reduction for small businesses in transactions, and upgrades to bank bulk clearing systems.
It’s important to note that the elimination of cheques does not spell the end for cash usage altogether. The government acknowledges that cash still plays a vital role for certain groups who may have limited access to digital payment methods, even though its use has significantly declined. To facilitate payments on behalf of individuals, the Consumer Data Right laws will be expanded to enable third parties to make payments. Additionally, consumers will have the option to obtain a Digital ID, which aims to foster trust in the digital payments system, although participation will remain voluntary.
Furthermore, the new payments strategy advocates for the deployment and adoption of artificial intelligence (AI) within the banking and payments sectors. The government recognises the immense potential of AI in driving innovation, enhancing security, and improving consumer outcomes. Already, AI is being utilised in these industries, and its further integration is expected to yield substantial benefits.
Simultaneously, the Australian Banking Association (ABA) has released a report showcasing the rapid expansion of Australia’s digital economy. The report reveals that mobile wallet transactions in the country have experienced a staggering surge. A remarkable 98.9% of banking interactions now occur digitally, with nearly all customer transactions being conducted through mobile apps or online platforms. In contrast, cash usage has dwindled to a mere 13% of payments, marking a significant decline from the 70% recorded in 2007.
The adoption of mobile wallets has witnessed exponential growth, with over 15.3 million cards registered to mobile wallets in 2022, representing a remarkable 760% increase from just over two million cards in 2018. The value of mobile wallet transactions has followed suit, soaring to $93 billion in 2022, a massive surge from $746 million in 2018, equating to a staggering 12,400% increase. Similarly, the number of mobile wallet transactions has skyrocketed from 29.2 million to 2.4 billion, an astounding rise of 8,200%.
The ABA report serves as a testament to the profound impact of digital technologies on Australia’s economy, particularly within the banking sector. It underscores the growing reliance on mobile wallets and digital payment methods, highlighting their convenience, efficiency, and widespread popularity among consumers. As the digital economy continues to expand, the ABA encourages further exploration and adoption of digital innovations to unlock greater economic and social benefits.
Overall, Australia’s payment system is on the brink of significant transformation. With the phasing out of cheques, the government’s comprehensive payments strategy, and the rapid expansion of the digital economy, the country is poised to embrace a future of more efficient, secure, and technologically advanced payment methods, ensuring a smooth transition into the digital age while still accommodating the needs of those reliant on cash.