Morning Briefing: P2P payments yet to take off in Australia

Australians are lagging behind in embracing digital money transfers between people... No sudden increase predicted for renovation activity...

P2P payments yet to take off in Australia
Australians are lagging behind in embracing digital money transfers between people, or "P2P" payments, according to an article in the Sydney Morning Herald.

New research by Visa shows that most are still relying on old methods like cash, cheque or electronic bank transfers for payments between people, and small businesses.

But Visa predicts that this will start to change as digital businesses grow and will try to move in on banks' turf by allowing people to transfer money digitally.

Only 13 per cent of customers had made such a transfer through their bank's digital application, the survey found, with 38 per cent of Australians still using cash for amounts of more than $100, which, it said, was one of the highest rates in the developed world.

Visa said the reason for the numbers in Australia was the time-consuming process of making a digital transfer, with users needing their bank account number and BSB on hand, and can take several days.

"A lot of social media platforms around the world – Facebook, WeChat, Snapchat, Twitter – they're starting to move into this space," said Rob Walls, head of product for Visa in Australia, New Zealand and South Pacific

"Those platforms aren't here, but we do know that when they do launch, consumer adoption is very quick."

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No sudden increase predicted for renovation activity

Australia’s renovation industry is a frustrated one, according to the Housing Industry Association of Australia (HIA).

According the HIA, the industry’s recent slump won’t be one that is quickly forgotten, as slow growth is forecast over the coming years.

“Many in the renovations market are frustrated at the slow pace of the current recovery, following the slump in activity between 2011 and 2013,” HIA senior economist Shane Garrett said.

“The hesitant pace of the current recovery is mainly due to patchy consumer sentiment and challenging labour market conditions in several states. Dwelling price growth is also pretty unspectacular in a number of important markets,” Garrett said.

What growth there is in the coming years won’t be evenly distributed either, with it to likely be concentrated in areas that have seen strong rates of capital growth.

“There is considerable geographic variation however. Demand for renovations in NSW has been greatly boosted by the strength of prices,” Garrett said.

“Many Sydney households that had been planning on moving house find that it is now much more affordable to undertake a major renovations job instead.”

The HIA predicts renovation activity will pick up this year by 3.9%, followed by a slight 0.4% increase in 2016.

Activity will then grow by 0.6% in 2017 followed by a 3.0% increase in 2018, bringing the total volume of renovations activity to $30.62 billion; however the HIA is somewhat concerned about recent interest rate rises.

“Australia’s home renovations market is a major strand of consumer spending and will be worth just under $30 billion this year. Its labour intensive nature means that it has substantially positive knock-on effects for employment,” Garrett said

“Over the coming years, the modest recovery will continue. This will be spurred on by very favourable interest rate settings as well as improvements in economic growth and the labour market over the medium term. However, the recent tightening of mortgage credit conditions casts an unwelcome shadow.”

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