Cards overtake cash for the first time: Craig James

Cards overtake cash for the first time: Craig James
Cards overtake cash for the first time: Craig James

GUEST OBSERVER 

Credit & debit card payments have overtaken cash as the most common way that purchases/transactions are made by Aussie consumers. 


Second jobs: In 2015/16 just over 763,000 people had secondary jobs. Administrative and support services accounted for 130,200 (17.1 per cent) secondary jobs, followed by Health care and social assistance with 114,300 (15.0 per cent) secondary jobs. 
The Reserve Bank survey provides insights into consumer purchase activity. The Australian Bureau of Statistics provides detailed job market data that enable fresh insights into working hours and pay. 


What does it all mean?

Aussie consumers are relying more and more on credit & debit cards and other payment methods like BPay to make their transactions. Today 52 per cent of all transactions are made with cards with cash accounting for 37 per cent of transactions. Three years ago cash led by 47 per cent to 43 per cent of payments. Cash now only leads card payments for transactions of less than $10. 


While Aussies like using cards for payments only around 10 per cent of respondents said they were interested in making payments with mobile devices like phones. 


The Consumer Payments Survey provides valuable information for businesses about why certain payment methods are preferred as well as trends in use. 


Growth in secondary jobs has surpassed the growth in main jobs for the past three years. The hard part is working out whether it is by choice or necessity. But the number with second jobs is broadly equal to the number of unemployed. 


The average worker received $61,029 in pay in 2015/16 but businesses paid $71,639 for every worker once costs like training, payroll tax and recruitment costs are factored in. 


What do the figures show? 
Reserve Bank Payments survey

“The Reserve Bank's triennial Consumer Payments Survey (CPS) provides a detailed snapshot of how Australian consumers make payments. The 2016 CPS recorded information on around 17,000 day-to-day payments made by over 1,500 participants during a week. The data show that Australian consumers continued to switch from paper-based ways of making payments such as cash and cheques, towards digital payment methods (particularly debit and credit cards). Cards were the most frequently used means of payment in the 2016 survey, overtaking cash for the first time.” 


Included in the findings:

Around 27 per cent of all payments were made at food retailers followed by supermarket/bottle shop (26 per cent); goods retailers (18 per cent); medical/health, other (9 per cent); petrol stations (6 per cent); household bills (6 per cent) 


Around 64 per cent of the number of card payments were made by tap/wave over the card readers (47 per cent of the value) 


On average people take out money from an ATM less than once a fortnight (0.4 times a week) 


On average people have around $101 in their wallets (median value $40) 


Cash (37 per cent of all payments) still leads debit cards (30 per cent) and credit cards (22 per cent)
46 per cent of those aged 18-29 use debit cards whereas 51 per cent of those 65+ use cash for payments 86 per cent of all payments made in person with 11 per cent using PC/tablet
62 per cent of purchases (payments) less than $10 were made with cash

ABS Labour Account 2015/16

In 2015/16, total labour income increased by 3.8 per cent to $895.2 billion. This was driven by total compensation of employees, which increased by 3.1 per cent to $807.1 billion, while labour income from self-employment increased by 10.8 per cent to $88.1 billion.

The total number of hours actually worked increased 2.0 per cent to 20.2 billion hours. Hours sought but not worked, made up of hours sought by unemployed and additional hours sought by underemployed, decreased by 2.3 per cent to 1.9 billion hours.

The total number of employed persons increased by 2.6 per cent to 12.5 million. There were 730,600 unemployed persons in 2015/16, a decrease of 23,200 persons (3.1 per cent). At the same time, there were 1.1 million underemployed persons, an increase of 39,600 persons (3.8 per cent).

The total number of jobs in the Australian economy increased by 358,600 (or 2.8 per cent), made up of 16,700 job vacancies and 341,900 filled jobs. Job vacancies increased by 11.0 per cent from 152,800 to 169,500, while filled jobs increased by 2.7 per cent from 12.9 million to 13.2 million.

The number of main jobs grew by 2.6 per cent from 12.1 million in 2014/15 to 12.5 million in 2015/16. Over the same period, secondary jobs grew by 3.7 per cent from 735,900 in 2014/15 to 763,200 in 2015/16.

What is the importance of the economic data?

Click to enlarge

Cards overtake cash for the first time: Craig James

The Reserve Bank surveys consumer payments every three years. The data is valuable for businesses as well 
as policymakers. 


The Australian Bureau of Statistics (ABS) have compiled an experimental Labour Account that is designed to better assess trends in the economy and assist with calculations of economic growth and productivity. 
What are the implications for interest rates and investors? 


Following the purchases made with cards may prove a better way of tracking spending across the economy. 


A raft of extra costs like payroll tax is hindering the ability of businesses to take on more staff. 


Craig James is the chief economist at CommSec.

Craig James

Craig James

Craig James is the Chief Economist at CommSec, interpreting ‘big picture’ economic and financial trends.

Tags: 
Credit Cards Consumers

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