The study, which examined transaction payment methods over the past twelve months, found that 70 per cent of all transactions were paid with cash, 15 per cent were paid with EFTPOS or debit cards, 9 per cent with Visa and MasterCard credit cards and 1 per cent with American Express and Diners Club credit cards.

The proportion of cash transactions was highest for low value purchases. For payments between $0 and $10 (for which many merchants do not accept electronic payments), cash accounted for the overwhelming majority of all transactions. Between $11 and $25, which represented items such as food and drinks, cash was used in 75 per cent of instances.

Credit and debit cards were most commonly used for purchases between $25 and $200, accounting for 45 per cent of transactions.

For purchases over $500, cheques and BPay were commonly used, accounting for 29 per cent of transaction volumes.

The study also highlighted interesting consumer trends regarding payment method motivations. It found "interest-free periods induce substitution to credit cards from debit cards, (while) loyalty programs induce substitution from cash".

Where a credit card offers an interest free period that allows the consumer to access a line of credit with no additional charges, the consumer is more likely to use a credit card instead of a debit card. Where the interest free period is not available and the use of a credit card would incur financial penalties such as interest, the consumer was more likely to use a debit card.

An average consumer is 23 per cent more likely to use their credit card for transactions if the card offers a rewards or loyalty program.

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