Cash still king

There is a generational divide between older Australians reluctant to take up mobile and contactless payment methods, and younger Australians no longer tied to cash, shows new research into the payment methods of Australians.

According to the September 2012 HP–RFi Australian Payments Research Report, cash is still king when it comes to consumer payment methods.

Consumers’ lack of trust in the ability of telcos to manage their payment and purchase needs, as well as increasing concerns over the security of online payments are the reasons behind the preference for cash.

The report says 88 per cent of consumers use cash as a payment method in a typical month compared to credit cards (50 per cent), Bpay (48 per cent), eftpos/ATM cards (46 per cent) and Visa/MasterCard debit cards (45 per cent).

Baby Boomers (aged 45-64) are particularly reluctant to stop using cash as their primary method of payment, with 60 per cent of Baby Boomers saying they do not believe in a cashless future, compared to 45 per cent of Gen Y (aged 18-29).

Seventy per cent of consumers are aware of contactless card payments, with the payment option growing from 12 per cent to 21 per cent between October 2011 and September 2012.

Of those Australians that use contactless cards, 32 per cent use them to make purchases at least once every week and 68 per cent use them at least once a month.

Smartphones are also becoming more advanced and innovations such as near field communication (NFC) being installed on devices means that the banking world is becoming increasingly focused on mobility payments.

Twenty seven per cent of consumers found contactless payments in the form of a smartphone with built-in capabilities to be appealing.

In particular, younger Australians between the ages of 18 to 34 consider mobile payments to be appealing.

Almost 50 per cent of 18 to 24 year olds consider a smartphone with built-in contactless capabilities to be appealing, compared to 10 per cent of retirees (age 65-80).

In September 2012, 30 per cent of Gen Y consumers said they would tap their phone against the payee’s mobile phone to make a payment, while 27 per cent would use the payee’s mobile number to make a payment.

Furthermore, more than 50 per cent of consumers aged between 18 and 34 believe that they would use cash less if contactless terminals were everywhere and if they had a contactless capable mobile phone.

Less than 20 per cent of consumers aged 45 to 80 found making contactless payments via their smartphone appealing.

Barriers that were identified by this age group towards contactless mobile payments included visibility issues, the ‘inconvenience’ of always having to carry their phone, having to upgrade their phone to a smartphone, and not knowing how to the conduct the payment and how it works.

Security and privacy are also an issue for mobile and contactless purchases. Consumers stated they were concerned about hackers and fraud, as well as having their financial information and/or information on their transactions accessed by third parties.

Additionally, consumers identified network coverage, privacy, and an overall lack of trust towards telcos as barriers for adopting the technology. Only 5 per cent of consumers strongly agreed that they would trust their telco to handle their payment and purchasing needs.

A staggering 45 per cent and 48 per cent of consumers did not trust their telcos with their contactless payment and personal banking needs, respectively.

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