Pandemic Payment Patterns

Abstract

COVID-19 has temporarily changed the relative cost and benefits of different payment methods: cash has become more costly in terms of health risks, ease of use and likelihood of acceptance, whereas debit card usage has become less costly. As a result, consumers have shifted away from cash. For some, this may speed up the adoption of electronic payment methods, resulting in a permanent change in payment behaviour. Others will return to their preferred payment method once the influence of COVID-19 on our health and daily lives has faded away. Based on unique payment diary survey data collected among a representative panel of Dutch consumers, we study the shift in payment behaviour and payment preferences during the first phase of the COVID-19 pandemic. Since the start of the lockdown in the Netherlands the likelihood of debit card usage at the expense of cash has increased by 13 percentage points. About 60 percent of this shift has persisted seven months after the start of the pandemic in the Netherlands and appears to be longlived. Also, the pandemic has resulted in a shift in payment preferences towards more contactless payments. Both effects are largest for elderly people.

Keywords: COVID-19, consumer payment behaviour, consumption, payment diary data

JEL Classification: D12, E21, E42, O33