The Reserve Bank of Australia has released its Payments System Board Annual Report for 2023. In this article, we highlight a few data points that caught our eye, and hear from Chris Jewell about tackling fraud and scams.
The Reserve Bank is responsible for ensuring the stability, efficiency and competitiveness of the payments system through the Payments System Board. The Payments System Board continues to focus on fostering innovation in a regulatory environment that supports the continued safety and security of the Australian payments system.
Currently, the Board's strategic priorities are:
- Strengthen the resilience of payments and market infrastructures
- Advance and implement reforms for payments and market infrastructures
- Promote competitive, cost-effective and accessible electronic payments
- Enhance cross-border payments
- Shape the future of money in Australia
The Board's 2023 report brims with facts, insights, and emerging and declining trends across the payments landscape. It's always a fascinating read, but can be quite heavy-going. So, in the interest of speed and efficiency, we've done the bulk of the heavy-lifting for you. Read on for some of the report's stand-out data points and insights.
One thing is abundantly clear, the Australian payments system is changing rapidly with new technologies and participants providing more payment options to consumers and businesses.
The move from cash to cards and the NPP continues
The shift from cash to card payments continues, as does the rapid uptake of mobile wallets offered by large tech companies. Use of the New Payments Platform (NPP) – Australia’s fast payments system – has also continued to grow since its launch five years ago.
Since 2007, the share of payments made using cash has consistently declined. Cash made up 69 per cent of the total number of consumer payments in 2007 and fell to 13 per cent in 2022 (Graph 2.5, left panel)
In 2007, cash made up almost all in-person payments with a value of less than $10, but in 2022 only one in four payments of this size were made using cash (Graph 2.6).
Australians increasingly prefer to make payments electronically
In 2022/23, Australians made around 730 electronic transactions per person on average, compared with about 330 per person a decade earlier.
Cards are the most commonly used retail payment method in Australia, with three-quarters of all consumer transactions made using debit and credit cards (Table 2.1). Two-thirds of those are debit card transactions.
Use of debit cards by Australians has doubled from a decade ago, with their share of total transactions (by number) increasing to more than half in 2022.
The continuing trend to electronic payments reflects innovation in the payments system and changing payment preferences. This trend has been accelerated by changes in payment behaviour through the pandemic.
Australia has been quick to adopt contactless payments compared with some other countries (Graph 2.3).
Trending: Real-time account-to-account [A2A] payments
Use of Australia’s fast account-to-account payments system, the NPP, has continued to grow, with more account-to-account transfers now happening in real-time.
The NPP is available to the customers of more than 110 financial institutions and is used to make around a quarter of all account-to-account payments.
In 2022/23 the NPP processed over 1.3 billion transactions, worth more than $1.5 trillion, and usage continues to grow (Graph 2.11).
Most account-to-account payments, however, still occur over the traditional direct entry rails.
The costs of fees and scams
Fees make a significant contribution to payments costs, with net fees across the major card networks amounting to around $1.2 billion in 2021/22.
According to data published by the ACCC, financial losses from scams rose by 63 per cent to $2.9 billion in 2022, with losses from investment scams growing by 113 per cent.
The seriousness of this is not lost on Zepto CEO, Chris Jewell.
"There's a vulnerable segment of our community being targeted by fraud and scams — and that's not okay. We all need to be doing our part. It's important to acknowledge that this is an ecosystem issue. It's not just a telco issue, or social media platform issue, or a bank or fintech issue. This is something we all need to get behind. We need to be focused, to give it attention, and support the regulation and standards being proposed by the industry to drive and fight for this."
CHRIS JEWELL, ZEPTO CEO
"Trust in the payment system, especially when it comes to fraud and scams, is absolutely paramount. Zepto endorses every move by industry in terms of setting the highest standards possible to reduce fraud and scams. We need to be proactive by getting ahead of them. We've got our own compliance, our own obligations, and very clear mandates in terms of what governance looks for us. As an industry it's vital we continue to lean in and ensure we're collaborating and prioritising these things together," he added.
More Australians are using mobile wallets for payments
There has been a marked shift to card payments being made with mobile wallets offered by large technology companies, such as Apple Pay, Google Pay and Samsung Pay.
The share of debit and credit card payments made via mobile wallets has continued to grow in the post-pandemic period. In the June quarter 2023 it reached 35 per cent of card transactions, up from 10 per cent in early 2020 (Graph 2.9). Debit card payments are more likely to be made using a mobile wallet than credit card payments.
Buy-Now-Pay-Later [BNPL] growth continues
BNPL transactions have continued to grow strongly over the past year, albeit at a slower pace than previously. The value of BNPL transactions increased by around 13 per cent in 2022/23, compared with 37 per cent in 2021/22.
The value of BNPL transactions in 2022/23 was around $19 billion, equivalent to around 2 per cent of Australian card purchases.
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The report takes a detailed look at all of the above and more including Payments System regulation and policy issues, as well as developments in the Clearing and Settlement industry.
To download a full copy of the report CLICK HERE
Source: Reserve Bank of Australia 2023