THE DIGITAL ECONOMY - Australian Payments Network

AUSTRALIAN PAYMENTS NETWORK MILESTONES REPORT

THE DIGITAL ECONOMY

NINTH REPORT, JUNE 2018

Australian Payments Network Limited ABN 12 055 136 519 Level 23, Tower 3 International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 Telephone +61 2 9216 4888 Email info@.au .au

This report has been prepared by the Australian Payments Network to monitor the continued decline of cheques as we move further towards a digital economy.

CONTENTS

1. THE DIGITAL ECONOMY.........................................................................4 1.1. The Changing Payments Mix.................................................................4 1.2. The Evolving Customer Experience....................................................6 1.3. Global Experience .....................................................................................7

2. ENABLING AND SUPPORTING THE DIGITAL ECONOMY.....................8 2.1. Payments Infrastructure.......................................................................8 2.2. New Entrants and Emerging Trends ..................................................9

3. UPDATE ON INDUSTRY AND STAKEHOLDER INITIATIVES ...............10 3.1. Industry Initiatives................................................................................ 10 3.2. Government Initiatives ........................................................................ 10 3.3. Global Regulatory Initiatives............................................................. 10

AUSTRALIAN PAYMENTS NETWORK LIMITED

1.0 THE DIGITAL ECONOMY

Businesses and consumers are embracing digital payments. Cards have overtaken cash as the most popular form of payment and cheque use is plummeting. This shift to digital payments provides a powerful base for innovation.

2017

8.3Billion

2012 4.8Billion

CARD PAYMENTS ARE MORE POPULAR THAN EVER AND

DEBIT CARDS DOMINATE

DebitCard

Debit Card payments

DebitCard

Credit Card payments

CreditCard

3.0

3.4

Billion

3.8

Billion

4.3

Billion

4.9

Billion

5.6

Billion

Billion

2012 2013 2014 2015 2016 2017

1.8

1.9

2.1

Billion

2.3

Billion

2.5

Billion

2.7

Billion

Billion Billion

2012 2013 2014 2015 2016 2017

Source: RBA

1.1 THE CHANGING PAYMENTS MIX

The majority of consumers prefer cards to cash, and Australia leads the world in contactless payments. Two in every three card payments at point-of-sale are now contactless.1

Cards

In 2017, consumers made over 8.3 billion card payments ? almost 23 million every day.2 Nearly 7 in every 10 of these payments were made with a debit card.

? Debit card payments grew 15.3% to 5.6 billion, an 87% increase since 2012. By value, this equates to $290.6 billion ? a 9.1% on the previous year.

? Credit cards are typically used for higher value items, reaching $324.9 billion in 2017 ? up 4% on the previous year. By number, these payments grew by 8.1% in 2017 to 2.7 billion, a 51% increase since 2012.

Direct Entry

Direct entry continues to show strong growth. Consumers now make some 10.6 million transfers every day ? 43.2% more than in 2012. By value, direct entry represent the lion's share of retail payments.

? In 2017, direct debits grew by 13.9% to 1.2 billion, and by 4.9% in value to $6.2 trillion.

? Direct credits increased by 6.9% to 2.6 billion, and by 7.7% in value to $9.5 trillion.

Percentage increase

(2017)

9.1%

3.3 3.6 3.9

Billion Billion Billion 2015 2016 2017

4 THE DIGITAL ECONOMY Ninth Report, June 2018

DIRECT ENTRY TRANSFERS

ARE ON THE RISE

Source: RBA

AUSTRALIAN PAYMENTS NETWORK LIMITED

Cash

As cards and digital payments become increasingly popular, consumers are using cash less frequently.

? In 2017, the number of ATM withdrawals dropped by 5.9% to 610.1 million ? down to 1.7 million withdrawals a day. ATM withdrawals have fallen 25% since 2012.

? The value of ATM withdrawals dropped 2.1% in 2017 to $132.6 billion, and by 11.1% since 2012.

Early indications suggest that Australians are using ATMs belonging to other banks more often, following the removal of fees to non-customers from September 2017. In January 2018, 46% of all withdrawals were made at ATMs belonging to other banks, compared to 41% in January 2017. Future Digital Economy Reports will monitor changes over time.

Cheques

Australians continue to abandon cheques at a rapid rate.

? Cheque use plummeted by 19.7% in 2017 to 89.7 million. Since 2012, cheque use has dropped 60.0%.

? The overall value of cheques dropped by 3.8% in 2017, and by 8% since 2012.

AS CARDS AND DIGITAL PAYMENTS BECOME INCREASINGLY POPULAR,

CONSUMERS ARE USING CASH LESS FREQUENTLY

The number of ATM withdrawals has fallen close to 30% over the last decade

DOWN

-2.9%

840.2

Million

2007

DOWN

-25.3%

816.2 610.1

Million Million

2012

2017

Source: RBA

418.1

Million

224.4

Million

-46.3%

89.7

Million

-60.0%

INDIVIDUALS AND BUSINESSES ARE

ABANDONING CHEQUES

AT A RAPID RATE

2007

Source: RBA

2012

2017

Ninth Report, June 2018 THE DIGITAL ECONOMY 5

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