In September of this year, Peter Mair’s submission to the RBA Innovation Review Conclusions created a surprising media splash. Mr Mair, a former RBA official and current finance media commentator, suggested significant and widespread hoarding of $50 and $100 banknotes by older Australians. In the media frenzy that followed, Mr Mair further suggested that “the average pensioner couple could hold up to $50,000 in undeclared $50 and $100 notes to get access to the pension.” Not surprisingly, these comments set off a media firestorm. The Minister of Finance Penny Wong commented, responding, somewhat tongue in cheek, that she hadn’t been looking under any pensioner’s bed for cash! The coverage raises the issue of high denomination banknotes in Australia. Are we awash in high denomination banknotes in Australia? Is Australia out of line with its international peers? Where are all those $100 notes and what are they being used for?
Cheques now represent just 1.2% of all non-cash transactions as Australians show a clear preference for electronic payment methods.
Over the past 10 years, cheque use has declined by nearly 73% and the rate of decline is accelerating. Simultaneously, cash use is declining with ATM use dropping a further 6.6% in the 2016 financial year.
These declines have been driven by the continued increase of digital transactions. The use of debit and credit cards grew by 12.1% this year, while direct entry use increased by 7.2%. Supporting this growth is the increase in digital literacy. Over 65s in Australia are embracing online banking with over half of older internet users performing online banking transactions. Meanwhile, online spend is diversifying as it matures. Takeaway Food had the fastest annual growth of 56.1% with overall online sales up by 13.5%.
Check out our Australia’s Digital Economy Infographic below or click here to read the full Milestones Report November 2016.