2020 in review: The pandemic's impact on payment behaviour

  • By Divij Gaur

Last year signalled a significant shift in the change to day-to-day payment behaviour. It will be  now be interesting to track if the on-going pandemic will continue pushing consumers in the “new normal” direction, writes RFi Group's Divij Gaur. 

The COVID-19 pandemic has led to dramatic differences in the everyday life of an individual, one key component of daily life that is largely being affected by the global virus is the way one pays for goods/services.

Going back to 2019 and the years before it, an average customer paying for goods  and services had the liberty to choose cash as a suitable method of payment.

Whereas now, the same customer would be limited to using cash as a means to complete their transaction. The pandemic single-handedly hindered the flow of cash and accelerated the growth of digital payment methods like debit/credit cards and mobile payments (e.g. Apple Pay, Google Pay etc.).

As witnessed in the chart above, the fall in cash usage and the rise in digital transactions has materialised within RFi Group’s Payments Diary study, an annual survey that is divided into a demographic study along with a diary component (i.e. respondents take part in a 7-day diary study in which they record all payments and withdrawals they make).

Additionally, the rise in contactless transactions made using a card or mobile payment service is evident within the 2020 study as well - as show in the chart below.  

Moreover, the pandemic and the subsequent government lockdowns have had a significant impact on consumer payment behaviour and preferences, with the greatest impact being on payment channels.

The annual study showcases a significant decrease in face-to-face transactions while an increase in online (using an internet browser) and in-app (mobile or tablet) transactions as shown in the chart below. 

 As a result, payment categories like shops/stores (incl. retail/supermarket) and dining (incl. takeaway and café) benefited the most from the surge of payments being completed via online/in-app channels. 

With such drastic shifts in trends across payment methods and behaviours, closing the study while the pandemic was still ravaging across different economies felt half-finished.

This meant the Payments Diary study was commissioned for a revisit in the tail ends of 2020 to provide an update on consumer payment behaviour and to understand whether the abrupt shifts in payment trends were impermanent or the new normal. The revisited study saw cash usage witnessing a slight rebound in the second half of 2020 but remains well below pre-COVID-19 levels as highlighted in the chart below.  

While the usage of cash is dwarfed by other payment methods, the sentiment over the future of cash remains quite at large.

When asked if regular cash users can imagine a scenario where they will stop using cash entirely, 49 pr cent of regular cash users said ‘No’ while 32 per centsaid ‘Yes’, with the remaining 19 per cent being 'not entirely sure’ with their future with cash.

Concentrating on that 32 per cent from above, a subsequent question was asked based on what timeframe do these consumers see themselves ceasing cash use entirely. Consumers aged under 44 are the most likely to bring a halt in cash usage in more than 5 years’ time - as revealed in the chart below. 



Whereas for payment behaviours and preferences, at a high-level payment behaviour did not change significantly through 2020.

The shift away from in-person dining to takeaway as a result of lockdowns has reversed.

While in terms of payment channels, the share of volume and value of online payments decreased slightly between May and November. 

However, online payments remain higher compared to 2019 with Australians shopping online more frequently (3.3 separate purchases made online in 2019 to 3.6 separate purchases made in 2020) and spending more on online purchases (An average of $134 spent in 2019 to an average of $201 spent in 2020). 

Overall, RFi Group's findings reveal that certain irregular shifts in payment trends were transitory while other aspects are now moving in a completely new direction.

Divij Gaur is the lead research analyst with RFi Group.