Cheques will be phased out by 2030 as mobile wallet use sky-rockets

Australia is set to be a cheque-less society by the end of the decade, if the federal government has its way. Treasurer Jim Chalmers announced on Wednesday morning that his government would be moving to phase out cheques by no later than 2030.

“We know that usage of cheques has been declining,” he said. “This is largely because digital transactions are easier, cheaper and more accessible. In fact, 98% of retail cheques could be serviced through internet or mobile banking.”

Because cheques only account for only 0.2% of all payments, according to figures from an Australian Banking Association (ABA) report. Cheque payments are also more expensive to process compared to other payment types — and it’s been that way for some time.  

A report for the Reserve Bank of Australia in 2008 — that’s 15 years ago — said it was costly then, saying it cost financial $4 .22 to process cheques. Some banks will also charge fees for cashing cheques. 

“Leaving cheques in the system is an increasingly costly way of servicing a tiny and declining fraction of payments,” Chalmers said. A mobile wallet means people register their bank card to use on their mobile devices — phones and smart watches — meaning they can make payments without needing to carry their physical card. 

“Australians are not just leaving their wallets at home, they are digitising them,” ABA chief executive Anna Bligh said. “The popularity of mobile wallet transactions has sky-rocketed from $ 746 million in 2018 to more than $ 93 billion in 2022.”

More than 15.3 million cards were registered to mobile wallets in 2022. That’s a significant increase from 2018, when there were only about 2 million cards registered to mobile wallets. 

The figures showed just 0.7% of banking interactions were carried out at a branch. That’s a 46% decline from 2019.Meanwhile, 98.9% of interactions took place digitally, via online and app interactions. 

But the APA’s online and app interaction figures were based on daily logins and it’s unclear exactly what kind of interactions occurred in these logins. “A single log in may lead to multiple interactions and hence is likely to be understated,” the report said.

This means we don’t know how many of these interactions were customers checking their bank balances out of habit and how many were customers carrying out transactions. 

The ABA said people were going to branches less because “most transactions can conveniently be done online or by phone”. It made a point of saying that customers in regional areas — where internet services are typically less reliable than metropolitan areas — were cutting back on branch visits at similar rates to their city counterparts. 

“Regional customers are reducing their branch interactions for the same reasons as metro customers: more than 80% prefer online or phone channels for their main banking activities and 89% use online banking,” the report said.

And while the number of branches decreased in the past 20 years, the APA stressed that Australians got more bank branches than similar countries. “For banks that participate in Bank@Post, the report shows that 98%  of branch closures occurred within three kilometres of a branch of the same brand or one of the 3,540 Bank@Post locations across the country – a service that is funded by Australian banks,” Bligh said. 

The report showed Australia had a bank branch density of 24 bank branches per 100,000 adults. It compared that countries with similar urbanisation rates to Australia: New Zealand and Finland. New Zealand has 18 branches per 100,000 adults, while Finland has six per 100,000 adults.

“While customers drive these rapid shifts to digital banking and payments, there will continue to be a role for face-to-face banking services,” Bligh said. 

“This transaction will be gradual, coordinated, inclusive and respectful,” Chalmers said. 

“Public consultation with the whole community will take place before the end of the year — including with the states and territories. We will work with you to make sure that every Australian gets the assistance that they need to make this important change”.