Australians increasingly use the internet and mobile apps for almost everything they do, whether banking or buying, downloading digital products and placing bets or booking holidays or classes. This is not a trend unique in any way to Australia but is being witnessed around the globe. Digital payments are considered the norm for many younger people, and in 2022, little over one-tenth of payments involved cash changing hands.
In under twenty years, cash has gone from accounting for over two-thirds of all payments made to thirteen per cent. Cheque usage is almost non-existent, and the most popular forms of payment are bank cards, with debit cards accounting for twice the number of payments of credit cards. While none of this is surprising, the marked shift to online spending and the use of digital wallets was fuelled by the COVID-19 pandemic. People who might never have considered purchasing online were left with very few other options. Every e-commerce sector saw rapid online growth between 2019 and 2022, and this does not appear to be reversing.
Contactless payments also exploded at this time, and people discovered the e-wallet with ApplePay or GooglePay on their phones, so plastic was left at home. Between 2019 and 2022, tap-device payments rose by 25%, inserting a card into a reader became almost as popular as paying by cheque, and tap-card declined in direct proportion to the rise in e-wallet usage. However, there is a vast age differential in usage, with only 9% of over 65s using this payment method.
The rapid rise of online payments has also been fuelled by the rise in fintech apps offering people alternative ways to pay for their online purchases. In the past, there was a good deal of concern about online security and the opportunity for fraudsters to intercept transactions, clone cards and even steal identities. While criminals might still try to do this, the banks have impressive security structures in place to keep customer details safe.
There are always new scams emerging to try and circumvent the enhanced security protocols, and customers and banks have to be on the lookout for suspicious phishing scams. However, the most common type of fraud in Australia in 2022 resulted in people paying out for goods and services that were non-existent to a fake online seller, and only 4% were a result of identity crime. Banks do have email and text alerts to try and alert customers to potential scams, but a considerable percentage of Australians are not signed up for these schemes. Online cardholder not-present fraud is projected to rise to a staggering AUS $49 billion by 2030, and this is probably the single most significant downside to online payments.
However, the pros are enormous, with speed and ease of use tipping the balance in favour of making online payments. It could be said that the biggest danger is not the built-in security, but the increasingly complicated lengths criminals will go to to appear legitimate. This can include setting up entirely false websites that appear to be genuine. Therefore, anyone paying for goods and services online must check the integrity of the sites they visit. The main things to look for are that sites use HTTPS and not HTTP for hosting – the S stands for secure. Many browsers have built-in firewalls that warn users if they are visiting sites that do not look secure.
Generally, a good way to ensure you are surfing and shopping on legitimate sites is to see what payment methods are available. If a seller only accepts personal bank transfers or insists on Bitcoin payments, for example, there is a good likelihood that they are up to no good.
Banks and payment apps only partner with legitimate sites and have done the background checks, so you do not have to. So, for example, PayID betting sites can be trusted because the online payment service is provided by your bank and the money is protected by its fraud detection processes. In addition, an extra level of security means the name of the company you are transferring money to appears before you confirm the transaction, so you cannot send it to the wrong company or a scam one.
PayPal also offers high levels of security for online payments. It is one of the most trusted fintech apps because buyers do not have to provide the seller with any financial or personal details. An email address is all the information that is required to make a purchase. In addition, PayPal has two-factor authentication, adding an extra layer of security. It is important to remember that purchases with PayPal are not protected in the same way if you choose the ‘send money to friends and family’ option. If a seller ever asks you to use this method (often citing they will save on commission), do not trust them. A legitimate seller will have proper online cart facilities and not be suggesting ‘dodgy deals’.
In summary, online payments are here to stay, safe and secure, but you must be a savvy user to avoid the downfalls.