Philip Lowe made the statements at the second annual Australian Payment Summit where he said that cash was becoming an increasingly niche payment.
“It looks like a turning point has been reached. It is now easier than it has been to conceive of a world in which banknotes are used for relatively few payments; that cash becomes a niche payment instrument,” he said.
Mr Lowe said he expected Australians to keep shifting towards electronic payments as cash payments continue to decline.
“At the same time as the use of cash for payments has been declining, the number of electronic transactions has been growing strongly. Today, Australians make, on average, nearly 500 electronic payments a year, up from around 100 per year around the turn of the century,” he said.
New technologies had been and would continue to be behind the success of electronic payments said Mr Lowe.
“The most significant of these is the New Payments Platform, which has made it possible for people to make real-time, person-to-person payments without using banknotes. A range of payment apps are also under development that would have the same effect. So, the direction of change is clear.”
The shift to electronic payments made sense as it was easier for the end user said Mr Lowe.
“The greater use of electronic payments can bring efficiency benefits, with lower costs and more functionality and choice for users,” he said.
Mr Lowe did stress though that as the country continues to move towards electronic payments – that certain factors, mainly security and reliability needed to improve.
“The issues of functionality, security and reliability, and cost are central to the development of the system. The Payments System Board will be keeping a close eye on these issues,” he said.
However, Mr Lowe said that cash would always have a part to play in the Australian economy and the RBA did not see a world without banknotes.
“While I have talked about a near cashless payments system, I want to emphasise that we don’t yet envisage a world without banknotes. The RBA is committed to providing cash consistent with demand by users and to support its distribution,” he said.
Eliot Hastie is a journalist on the wealth titles at Momentum Media.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).