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Australia - Is There Truly Payment Choice?

Australia is fast becoming the country being held up as an example of how cash is falling in popularity as a payment method. Some claim it is rushing headlong towards becoming a cashless society.

Forward thinking Australians; exercising the supremacy of consumers; thinking for themselves and switching to "modern" payment methods; enjoying Payments Choice?

Perhaps.

Then again, lets look at some recent landmarks in the Australian payments sector, just to see if there are any highlights which might demonstrate otherwise.

3 March 2009: surcharging introduced at Australian ATMs, including for balance inquiries. So banks start charging non-customers for using ATMs. With your own banks ATMs relatively hard to find Down Under, this leaves over 40% of the ATM-using population regularly paying to use an ATM. OR THEY COULD SWITCH TO CARDS?

2010: 62% of payments in Australia made using cash, having declined from 69% in 2006.

2010: full launch of "contactless" cards, though they were first introduced quietly in 2006. Floor limit $100, compared to £20 at the time in UK. Converting, this meant Australians could spend almost three times as much on a contactless purchase than "Pommes".

2016: cash use in Australia declines to 37%. In the UK, the comparable figure is 47%.

2016: Australians the most likely people on planet to make a contactless purchase. 59% of the countries population have made a contactless payment.

Now: denominations of bank notes in circulation. Numbers are millions of notes. (For information, the exchange rate $1.64 to £.)

                   Australia           UK

$5/£5             170               382

$10/£10         120               801

$20/£20         160               2168

$50/£50          643               312

$100               328               zero

Total               1421             3663

It is easy to see that there is a preponderance of higher denomination notes in Australia, with $5 and $10 notes only accounting for 20% of notes in circulation.

In the UK, £5 and £10 notes are 32% of notes in circulation.

For information, from 5 cents to $2, Australia and the UK have corresponding coins in circulation. There are also one and two pence coins in the UK.

Low denomination notes and coins are required to give change for, in particular, higher denomination notes. The lack of low denomination notes circulating in Australia is inevitably making it less convenient for businesses to offer change - and also for consumers to pay for small purchases, traditionally made using cash.

So:

2009; surcharges introduced at ATMs, including for balance inquiries. No other country charged for such inquiries at that time -or now.

2010: full of contactless, with high floor limit, disregarding fraud. The highest limit anywhere on the planet. Surprisingly(?), card fraud is a boom industry in Australia.

2016: lack of low denomination notes makes both giving change and making small purchases less convenient.

In UK Convenience Stores -50 thousand of them - in the year to April 2017, 76% of all purchases were made using cash. Small purchases, in the main, made convenient for consumers - the public, you and me - by the UK having a good range of low value notes and coins circulating, in adequate numbers.

IT IS SIMPLE NOT THE SAME IN AUSTRALIA.

SO IS THERE CONSUMER PAYMENT CHOICE AT WORK IN AUSTRALIA - OR ARE WE PERHAPS SEEING A MANIPULATION OF THE PAYMENTS SECTOR BY THOSE WHO PROFIT FROM NON-CASH TRANSACTIONS?

YOU DECIDE.

 

Saturday, 29th July 2017

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