Contactless payments on the rise while credit card use declines

Sally McMullen 17 May 2016

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Data from CommSec reveals how consumer card behaviour has changed over the last year. 

Through an analysis of Reserve Bank of Australia (RBA) data, CommSec has revealed some interesting changes in the way that Australians have been using using their credit and debit cards over the last year. It turns out that Aussies are still avid spenders, but we’re more likely to use our own cash with debit cards rather than paying on credit.

Are we using our debit cards more?

The data showed that debit transactions are up almost 13% from this time last year. In March this year, there were 9.3 transactions made per debit card in March, up from 8.6 in 2015. While debit card activity has risen, ATM use has fallen over the last year. CommSec chief economist Craig James said ATM withdrawals had fallen by approximately 7%. Given that the use of contactless payments has risen 60% over the last year, it’s not particularly surprising that cardholder’s need for cash (and thus, ATMs) has dropped.

This use of contactless payment technology is only predicted to grow with more banks picking up mobile payment options such as Apple Pay, Samsung Pay and Android Pay. Following ANZ’s Apple Pay launch earlier this month, its online applications increased by 20%. It won’t be long until the other major banks jump on the bandwagon, but you can see what other contactless payment alternatives are currently available here.

Debt is on the decline

This increased use of debit could also partially account for the fall in overall credit card debt. In March this year, the average credit card holder’s balance was down 1.8% in comparison to the year before. While this was only a small leap, with the average credit card balance dropping $12 to $3,154.60, this is the biggest balance fall Aussies have experienced in two years. In regards to balances attracting interest, this number is also down by 4%. In other words, the average outstanding balance fell by $35.60 in March to $1,990.40. This average balance is down by 5.4% on a year ago.

However, credit card activity is up from last year. This March, there was an average of 12.6 transactions made per credit card account (up from 12.1 a year ago). This increase in credit card use is surprising considering the drop in debt. If we’re still using our credit cards frequently, how come credit card debt has gone down in the last year? Hopefully, this means that Aussies are getting better at managing their debt. After reports of a record number of national credit card debt in 2015, it’s a relief to see the national debt levels start to decline, no matter how small.

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