Contactless purchases thrive, traditional machines flounder

Contactless payment is expected to become the norm in the short term future.
Contactless payment is expected to become the norm in the short term future.

Contactless payment methods will all but replace traditional physical credit and debit card payments by 2020 for transactions under $100, according to business information analysts at IBISWorld.

Overall, PIN-only and contactless credit card and debit card purchases are likely to continue their assault on cheque and cash options, after posting annualised transaction growth of 6.6 per cent and 14.2 per cent respectively over the four years through 2013-14.

Speedy transactions leave cheques in the dust

"The prospects for credit cards and debit cards are rosy, although contactless payments are taking over from traditional PIN transactions for purchases of less than $100," said IBISWorld Australia General Manager Mr Dan Ruthven.

"With the increase in online shopping, credit and debit transactions will continue to dominate the payments system for personal use and carve an increasing piece out of ATM withdrawals, despite holes in the wall being in more locations than ever before."

"The way Australians pay has been changing for some time. For generation X and the baby boomers, a chequebook is fondly remembered as the most popular of payment options. As more retail outlets, personal banking services and corporate purchases have moved to electronic payment methods, cheques have faced certain demise.

"In the coming years, contactless payments and paying using a mobile phone will begin to replace the standardised plastic cards we've widely used since the 1980s," said Mr Ruthven.

In 2013-14, the average value of a cheque totalled $4,045 – higher than at any point in history. There has been a reduction in the use of cheques for small and medium purchases, but continued use of cheques for large transactions.

Muscling in on the big boys' lending

IBISWorld expects the big four retail banks to retain their dominance of the lending market. The Big Four controlled some $2.3 trillion of loans as at June 2014 – significantly more than the $87.9 billion of outstanding loans provided to households and businesses by financial corporations other than the banks.