FinTech Australia today welcomed two new reports covering consumer payment methods and venture capital investment which illustrate the underlying strength of the nation’s fintech industry and further opportunities for growth.
On 25 July, the Reserve Bank of Australia released a discussion paper on consumer payment methods while on the same day CB Insights released a report which benchmarked fintech venture capital investment across the world.
The Reserve Bank discussion paper shows that cards have leapt ahead of cash for the first time when it comes to consumer payment methods in Australia.
In 2013, cash was used in 47 per cent of payments, compared to 43 per cent for cards.
Three years later, in 2016, this outcome has now flipped so that 52 per cent of payments are now via card, compared to just 37 per cent by cash.
Cards are now the most commonly used payment method for all but the lowest-value transactions (ie: those of $10 or less), the Reserve Bank of Australia finds.
“This outcome isn’t surprising, given the digitally savvy nature of Australian consumers and the fact that penetration of digital point-of-sale terminals and contactless card payments in Australia are among the highest in the world,” said FinTech Australia CEO Danielle Szetho.
“Importantly, the high percentage of non-cash payments is an important ongoing platform for fintech innovation, whether this comes from leveraging electronic payment data or creating new payment mechanisms or hardware.
“The coming New Payments Platform (NPP), which will provide near instant 24/7 payments, and the proposed open banking regime will further drive the trend away from cash and towards fintech innovation.
“As a result, we encourage the Reserve Bank of Australia to ensure that there are clear, transparent and affordable access protocols for fintechs to NPP infrastructure – unfortunately we haven’t seen these as yet.
“We also encourage the Australian Government to expedite its reforms to allow further customer access to their data, so that we can grow the number of innovative new fintech products and services, and provide consumers with more choice in how they pay for things.”
Separately, the CB Insights Global FinTech Report for Quarter 2 2017 found that Australia and Brazil were home to nine of the ten largest venture capital fintech funding deals that took place outside of Asia, Europe and North America from March 2016 to June 2017.
The report lists large Australian venture capital funding deals as including (in US dollars):
- Prospa (lending) – $19.3 million
- Society One (lending) – $19 million
- Airwallex (payments) – $13 million
- Uno (lending) – $12.3 million
- Assembly (payments) – $10 million
“We’re of the view that Australia remains an extremely attractive and sometimes under-serviced market for venture capital fintech investment and believe this report illustrates the huge potential here,” Ms Szetho said.
“We’re pleased to see that this CB Insights report recognises that Australia’s fintech industry is increasingly becoming a key world player.
“FinTech Australia will be continuing to promote the fintech innovation and talent on offer here in Australia to help attract international investment.”
The release of the two reports came after the release of the EY FinTech Adoption Index in June, which showed that Australia has among the best fintech market penetration in the world, ahead of other advanced markets such as Hong Kong, Singapore and the United States.
The index shows that Australia is now ranked fifth highest out of 20 surveyed markets for fintech consumer adoption.