Australia Payments Development on NPP and its consumer market

It's been a while updating myself with recent changes to APAC payments landscape since I have moved on to a product management role.

In my previous role as a lead business analyst, I used to keep myself up to date with recent changes to the country's payment developments. As a payment product manager, all the more I need to keep abreast of the changes.

Recently, Australia has joined Singapore and UK, rolling out a new payment system capable of processing payments within seconds. Australia's New Payments Platform (NPP) went live on 14 of Feb, rolling out solutions that allow customers to make instant payments.

The new platform also allows the transfer of funds from one person to another in real-time, using a phone number which is similar to Singapore's Paynow. Australia named this service as PayID and the ID can be either phone number, Australian Business Number (ABN) or an email address. BPay also uses PayID which they called it OSKO.

I will go into NPP in another post but let me shared what is Austalia market like after my research for past few days.

Use of cash
RBA has undertaken a study to find out on usage of cash payments since 2007 and subsequently in 2010, 2013 and 2016. Results has shown that cash used is declining and payments via cards are on the increased.

The image below is from https://www.rba.gov.au/payments-and-infrastructure/payments-system.html

Younger Australians tend to use less cash
https://www.rba.gov.au/publications/rdp/2017/2017-04/trends-in-consumer-payments.html

From the data below, I see that credit cards are rising due to

1. less friction in making payments
2. Convenience
3. Credit availability
4. Rewards point system

Why use Cash and Cheques?
Another question I'm asking why traditional payments, cash & cheques are still in used. from RBA report, the majority of the merchants are accepting these types of payments. Reasons, why merchants are still accepting these payments, could be due to the following reasons:

1. They get to have the value on hands immediately
2. They do not have to pay fees for accepting cash unlike cards

Older consumers tended to use cheques with around 70 percent of the number of cheque payments recorded in the 2016 CPS were made by participants aged 65 and over according to the report. Reasons, why cheques are still in used, is also the same with cash. Results consolidated show merchants still accepted it.

In summary, traditional payments are still prevalent is because of habits (especially for the older generation) & merchant acceptance of traditional payments. Increased usage in other payment types are mainly due to immediate value & frictionless to payers.

I will touch on treasury perspective for Australia markets in my next post.