Tag: Australian Retailers Association

How the wallet business is adapting to a cashless economy

Orange 2800

From velcro polyester to leather, designer or discount, wallets have long been the handy sidearm carrying our cards, cash and collection of half-stamped coffee cards.

Key points:

  • Wallet manufacturers are diversifying designs to accommodate changing consumer trends
  • The use of smartphone-based digital credit cards and identification is increasing
  • Digital credit cards can help combat fraud

Their designs have changed little over the past century but now manufacturers are having to adapt to developing trends and an increasingly cashless society.

Artisan leather goods store Angus Barrett Saddlery is based in the regional New South Wales city of Orange.

Their collection of traditional bi-fold wallets and more modern phone pouches appeal to a totally different demographic, retail and sales manager Amy Lyon said.

Ms Lyon said the shift to a cashless, and even cardless, economy had not harmed business and the demand for leather phone pouches outstripped supply.

“[Phone pouches are] pretty much being made-to-order; they haven’t even made it into the shop as a stocked item,” she said.

In line with the latest statistics, Ms Lyon said older generations were still opting for traditional bi-fold wallets with coin pouches, whereas younger customers wanted card holders and smartphone-integrated wallets.

While older styles of the wallet might be on the way out, Ms Lyon said stocking new styles would keep the business relevant into the future.


Younger generations are almost unanimously purchasing card holders and smartphone-integrated wallets. (ABC Central West: Luke Wong)

“I don’t think people are moving away from wallets; it’s just changing in terms of what they physically want to carry on them,” she said.

She said the uptake of digital cards accessed on smartphones was not as widespread in the regions as it might be in major cities, due to patchy reception and occasional telecommunications outages.

“The general consensus with customers is even though they’re cutting right back on what they’re carrying in their wallets, there’s almost a sense of not quite being able to entirely rely on the digital forms just yet,” Ms Lyon said.

“[Regional reception] improves all the time obviously[and] then we’ll see a stronger shift, more so into the digital wallets, I think.”

But the uptake of digital, smartphone-based credit cards and identification is changing how Australians use their wallets.


Smartphone-based card users made up 12 per cent of the market in the 12 months to March 2018. (Unsplash: Nathan Dumlao)

All of Australia’s big four banks offer digital credit cards, while optional digital drivers’ licences are available in South Australia and New South Wales.

Market researcher Roy Morgan found in the 12 months to March 2018, 12 per cent of bank customers were purchasing with virtual cards.

Australians aged 25 to 34 were the highest proportion of early adopters, with 21.6 per cent having ditched their physical cards for digital ones.

The second highest age group was 14 to 24-year-olds, with 17 per cent jumping onto to the cardless economy.

Digital credit cards help combat fraud

Adopting digital credit cards saves you space, but it may also save you money.

Russell Zimmerman, executive director of the Australian Retailers Association, said merchants preferred virtual card purchases because they were safer than a physical card, which could be easily pay-waved if stolen.

“From a retailer’s perspective, a transaction done on a mobile phone is far more likely to be a secure and non-fraudulent transaction,” Mr Zimmerman said.

“So, [there’s] very little chance of the retailer having to give a refund, or be responsible for the fact that they’ve taken a fraudulent transaction.”


Cashless card payments rely on a simple encryption method of tokenisation, making it more secure. (AAP (file image))

Data from the Australian Payments Network found that in the 2019 financial year, card-not-present credit card fraud dropped 5 per cent to $455.5 million.

This included digital sales where virtual cards were used to purchase online goods as well as in-store purchases.

The simple encryption method of tokenisation is key to the drop, where transactions are given bespoke ‘tokens’ that hide card details as payments are processed online.

Mr Zimmerman said the proliferation of tokenisation would help grow consumer confidence in the security of digital credit cards.

“If we can get secure transactions and people know they can’t be compromised, then I think we are in a position whereby people will feel very happy about purchasing on the internet, or bricks and mortar, using a mobile phone as a wallet,” he said.

Mr Zimmerman said more ways to pay would also help keep prices low for consumers.

“More competition generally means the prices are kept lower,” he said.

“That means that merchants don’t get charged, which means that we don’t have to surcharge customers.”

Source: https://www.abc.net.au/news

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