Fintechs outpacing banks in digital payments

The digital payments market is experiencing rapid disruption, with non-bank contactless/cardless mobile payment systems now being used by more Australians (6.5 per cent) than bank-owned solutions (6.4 per cent), according to the newly released Roy Morgan Digital Payment Solutions Currency Report.

Fintech market entrants such as Apple Pay, Android Pay and Google Wallet are taking market share from incumbents, in a market where 93.6 per cent of Australians aged over 14 are aware of at least one digital payment solution, and 72.4 per cent have used at least one digital payment solution in the past 12 months.

Roy Morgan’s report, based on more than 50,000 face-to-face consumer interviews, provides a 12 month perspective of how consumers are changing the way they pay for goods and services.

Key findings include:

  • Awareness of newer forms of digital payments is growing rapidly, with 57.3 per cent of Australians aware of “tap and go” payment systems, 39.6 per cent aware of bank-owned mobile payment systems, 46.4 per cent of non-bank tap-and-go systems, and 35.2 per cent aware of the emerging “buy-now-pay-later” payment systems.
  • Usage is lagging awareness considerably, with only 11.5 per cent of Australians having used a tap-and-go payment system in the last 12 months, and only 6.7 per cent of Australians having used a buy-now-pay-later digital solution over the same period.
  • Two long-established systems still dominate digital payments, with the phone/online BPay service being used by 52.9 per cent of Australians in the past year and the online Paypal service being used by 42 per cent over the same period.
  • In the emerging buy-now-pay-later space, 6 per cent of Australians have used the Afterpay service in the past year, with competitors Zip Pay and Zip Money used by 1.4 per cent and 0.6 per cent respectively.
  • The most-used bank-owned tap-and-go payments system, from CBA (used by 4.1 per cent of Australians in past 12 months), is still marginally ahead of the most-used non-bank tap-and-go solution, Apple Pay (used by 3.9 per cent of Australians)

Michele Levine, CEO, Roy Morgan, said, “One thing is clear – Australians love digital payments and the way we make payments is evolving quickly. The solutions being developed by the new market entrants and the incumbents not only help the consumer with a quicker and more convenient way to pay, but provide businesses with rich data on what the consumers are purchasing, how they are purchasing it, and where.

“The payment landscape will continue to evolve in the future. We are already seeing innovative new companies, such as Afterpay, changing the way in which people purchase goods that they cannot immediately afford. These ‘buy-now-pay-later’ companies may pose a threat to traditional payment types such as credit cards as well as traditional financial institutions as consumers can, in effect, access a small amount of credit instantly with no documentation.”

Ms Levine predicted that people will come to expect the minimum amount of effort when making a payment and the industry will need to adapt to these changing expectations by providing more innovative and seamless solutions.

“Traditional financial institutions may need to collaborate with Fintechs and other third parties to keep up with the rapidly changing digital payment landscape,” Ms Levine concluded.

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