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How Consumers Are Replacing Cash in Favor of Cards

On July 20, 2020, The Strawhecker Group (TSG) and Visa Consulting and Analytics (VCA), joined forces to conduct a survey of 569 U.S. consumers to examine Visa’s spend data. The primary objective was to comprehend how the COVID-19 pandemic has affected consumer behavior, method of payment, and how habits may change post-pandemic. 

The “Key Takeaways” that were highlighted in the survey were as followed:

  • Although travel was hardest-hit, there were certain vertical markets in which COVID-19 has “accelerated growth.”
  • Consumers are split about “when and if things will return to ‘normal’”.
  • COVID-19 has expedited the growth of both contactless and eCommerce payments

Use Of Cash Diminishing

According to the survey, “Purchasing In A Pandemic”, it was discovered that the preferred payment method is no longer cash. In fact, 26% of consumers surveyed anticipate to use less cash after the pandemic, versus 18% who expect their use of cash to increase. 

When it came to card use, it was found that 27% of consumers surveyed believe that they will use their credit and debit cards more after the pandemic than they previously did.  Just in the month of August, debit spending increased by 24% “year-over-year”. 

Forty-one percent of respondents stated that they own a contactless credit/debit card. This demonstrates that there is “lots of room to grow” to access these consumers. Of these respondents, 60% utilize their contactless card for almost half of their purchases. 

For digital wallets, 34% of consumers intend to use mobile/digital wallets to a greater extent post-pandemic than before. Plus, 7% are expecting to use their wallets less. Those respondents who don’t currently use and don’t plan on using mobile/digital wallets, 69% revealed they simply don’t wish to have one. Others expressed concerns about privacy and the low acceptance rates in stores. 

As contactless saturation continues to grow, 42% of consumers surveyed that use cards said they have not received a contactless card from their banking institution. After the pandemic, 55% of respondents foresee themselves using contactless cards more than ever, after the pandemic. 

In terms of the spreading of COVID-19, the vast majority of respondents are optimistic that contactless payments are much safer to stop the spreading of the virus. 

Back To Normal Life?

Consumers were also surveyed as to their overall “sentiment’ as to when they feel things will go “back to normal.” The results were that they fell into two distinct categories: there are those who feel comfortable now and those who are not. 

About 41% of consumers feel very comfortable returning to normal life now. This includes those that take preventative safety and protective measures such as social distancing. However, 59% feel that they will not be comfortable adopting a normal lifestyle until they are sure there is a guaranteed solution to end the pandemic.  And finally, 18% of this group are not sure they will “ever be comfortable” resuming their normal lifestyle as they did before the pandemic. 

Cash No Longer King?

Although it’s too soon to tell and make such a declaration, one thing is for sure, the pandemic may have irrevocably changed consumers’ approach to cash.  With heightened concerns about the second pandemic wave, an increasing number of consumers would much rather reach for their contactless cards than to handle cash.