How COVID-19 is accelerating the path to a cashless society

The usage of checks and cash has been in a decline for quite some time, and that trend has continued over the last four years. With the growing usage of credit and debit cards, as well as the growth of fintech, cash is becoming more and more obsolete. In recent years, fintech payment platforms such as venmo, paypal, and cashapp have contributed greatly to the growth of digital banking payments in Ireland and around the world. The COVID-19 pandemic created a new demand for these type of payments, as many businesses required contactless payments and online commerce greatly increased. The latest figures from BPFI’s payment monitor reflect this growing shift in payment methods. 


On March 15th 2021, Banking and Payments Federation Ireland published the figures from the BPFI Payments Monitor for the fourth quarter of 2020. The data showed a 67% increase in online/mobile banking between 2016 and 2020. It is also interesting to note that in the same four year period, check usage was cut in half. In fact, check usage fell to only 4.8 million in the second quarter of 2020, its lowest level on a quarterly basis since BPFI started tracking the data in 2008. According to Brian Hayes, chief executive at BPFI, these trends show that the digital banking revolution is truly underway, and this trend has “undoubtedly been accelerated by changing consumer demands and behaviour since the emergence of the Covid-19 pandemic” 


Changing consumer preferences are very easy to see in online banking, with the aforementioned 67% increase in mobile and online banking as a clear example of that. But consumers are changing the way they pay in other types of payments as well. The forced adaptation of contactless payments as a result of the pandemic has helped drive an 80% increase in card payments, with direct debit payments increasing by 25%. One example of this increase in direct debits is the fact that almost half of Irish adults who paid energy bills used direct debits in April 2020. 


This increase in contactless payments was truly unprecedented and is one of the main forces behind the shift away from cash. Approximately 1.4 million contactless payments were made per day in January 2021, totaling 42.3 million contactless payments with a combined value of over 674 million. Despite the reintroduction of level 5 covid restrictions following Christmas, which closed non-essential retail, the impact of the pandemic on payment methods was still clear when compared to previous years. In January 2021, contactless payments accounted for 45% of the total card payments made during the month, up 42% from a year earlier. While these numbers will undoubtedly fall as restrictions are lifted and the world returns to normal, it is expected that contactless payments will remain hugely popular, according to Mr. Hayes. This increase in card and contactless payments is just one of the many economic effects of the pandemic, and it will be interesting to see if this trend continues at its current rate.


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