Cheque use rates have plunged by 20 per cent to 111.6 million transactions, the largest drop ever recorded, as Australians forgo paper and embrace digital payments.

The latest figure is yet another nail in the coffin for paper-based payments, with cheque use rates plunging by 56 per cent within the last five years, according to figures released in the Milestones Report, an annual survey conducted by the Australia Payments Network.

Significantly, the exchange value of cheques also shrank by 6 per cent in 2016 despite remaining largely flat in previous years.

According to the report, the steady decline in cheque-based transactions echoes the national trend towards a cashless society.

Indeed, ATM usage rates have experienced a commensurate fall, with total ‘cash machine’ withdrawals plunging by 7.5 per cent to 648.5 million in 2016, following a 5.5 per cent drop in 2015.

Since 2011, ATM withdrawals have dropped by a total of 22 per cent.

Increasing smartphone penetration rates (reaching 84 per cent in 2016) are considered “an important contributing factor” to the decline in paper-based payments, the report said.

“Looking at the payment choices that Australians make, it’s clear that the vast majority of us are moving away from cash and cheques faster than ever before, Dr Leila Fourie, CEO of the Australian Payments Network, said.

“This is happening because of widespread use of new technology combined with a strong preference for faster and more convenient payment options.”

While often regarded as the last bastion of cheque payments, curiously, online spending rates for seniors (those aged over 65) have increased by 7.5 per cent, as many seek the convenience of screen-based purchases.