Speaking at a Payments System Conference 2006 at Melbourne Business School on 14 March 2006 Philip Lowe, the Reserve Bank Assistant Governor (Financial System) gave a snapshot of Australia’s payments system and possible changes:
1. the average number of cheques written per person in Australia has halved since the mid 1990s. Conversely, the average number of credit and debit card payments per person has more than doubled, as has the number of direct debits and credits.
2. Australians use more credit cards and less direct debits than other countries.
Key quotes:
“the shift towards electronic payments is undeniably global. It is driven by advances in technology and the lower cost of electronic payments, as well as the additional convenience that they can offer to consumers and businesses. There is much less certainty about how various individual methods of electronic payment are likely to evolve – which methods will be the winners and which will be the losers.
For much of the past decade or so – including at the time of the Wallis Inquiry – there have been numerous claims that smart cards or electronic purses were about to replace cash for many payments. Yet, while there have been some advances, relatively little has happened. On the other hand, use of the internet for banking has grown by much more than many thought likely in the mid 1990s…
In contrast to the difficulty we have in making predictions about particular products, we do have a reasonable handle on the factors that are likely to shape the evolution of the overall system. Developments in technology are clearly important, as is the willingness of consumers to adopt new technologies. Experience has also taught us that relative prices and costs are critical, as are the arrangements under which new firms enter the market. In addition, experience suggests that the way collective decisions are made is also important…
Exactly how the system evolves will depend, amongst other things, on the price signals that various users of the system face, on the extent to which potential entrants can participate in the market, and on decisions about the basic messaging architecture.”
