COVID sparks cash-use crash as digital payments boom

4 July 2022

A Bankwest analysis of payment trends has highlighted the lasting impact of COVID on the transition away from physical money, with digital payment volumes soaring and cash deposit and withdrawal numbers crashing.

However, in a surprise twist, while the volumes of physical cash transactions fell, the average value surged.

Bankwest looked at the trends over the past three years to identify how customers and the community adapted to the global pandemic and an environment in which people were encouraged to use contactless payment methods.

The data highlighted the pandemic’s acceleration of the trend away from physical money, with the volume of cash and cheque deposits in branches plummeting 44 per cent from May 2019 (pre-pandemic) to May 2020 (pandemic).

The trend was similar for physical cash withdrawals, which fell 42 per cent, and neither deposits nor withdrawals have recovered since living with the virus, remaining 46 per cent and 42 per cent, respectively, below 2019 levels.

However, the data also revealed a counter trend in the value of physical cash and cheque deposits (+13%) and withdrawals (+30%), which increased from 2019-22, suggesting people were using cash less, but in higher values.

The in-branch figures were also aligned with ATM usage trends, with withdrawal volumes down 27 per cent over the past financial year (Jul 21 to May 22, inclusive).

The falling physical cash numbers were offset by a boom in digital payments, with digital wallet usage (Apple and Google Pay) surging 563 per cent and the volume of transactions rising by 494 per cent from 2019-22.

The impact of COVID on the use of contactless payment methods was clear, with the volume of transactions through digital wallets leaping 167 per cent in the first year of the pandemic, from April 2020 to April 2021.

The average digital wallet transaction value also increased through COVID, growing more than 30 per cent to 39c from 2019-22.

Digital payments on the New Payments Platform (NPP) – the system that generally allows customers to make a payment instantly across financial institutions – leapt 18 per cent from July 2020 to June 2022.

Bankwest Chief Customer Officer Paul Vivian said: “Customers have consistently adapted to the evolving ways of life over the past three years, and the ways in which we use money has been one of the more significant shifts.

“People were encouraged to use contactless payment methods wherever possible once COVID-19 entered the community, significantly accelerating what was already a decreasing use of physical cash.

“These trends in payment preferences also don’t appear likely to revert to pre-pandemic behaviours, given there’s been no recovery in physical cash and cheque usage as public health measures have been unwound.

“However, the increase in the value of physical cash and cheque usage is interesting and indicates physical money has potentially become a niche payment method that is used for quite specific and high value purposes.

“That could include having a bank cheque issued to pay for a new car or withdrawing large amounts to pay for trade services or whitegoods in cash, but our everyday transactions now appear more likely to take place digitally.

“However, we’re unlikely to see physical cash disappear any time soon, as it remains a robust and stable payment method, with no reliance on the internet or power, and is important for less-digitally literate customers."

Digital wallet trends

(Apple and Google Pay)

Swipe
  Apr 2019 – Apr 2020
(%)
Apr 2020 – Apr 2021
(%)
Apr 2021 – Apr 2022
(%)
2019-2022
(%)
Total digital wallets +153
+74 +50
+563
Average transaction value +16
(30-35c)
0
(35-34c)
+14
(34-39c)
+32
(30-39c)
Average transaction volume +75
+167
+27
+494
Swipe

Atm withdrawal

(Month-on-Month for FY22)

Swipe
  Jul 21 Aug 21 Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jul - May
Cash withdrawal volumes (%)
N/A
0 -1 +1
-6 +4 -20 -4 +8 -5 -4 -27
Swipe

In-branch transactions

Swipe
  May 2019 – May 2020
(%)
May 2020 – May 2021
(%)
May 2021 – May 2022
(%)
2019-2022
(%)
Deposit volumes
-44
+5 -7
-46
Average deposit value
-10 +37 -9 +13
Withdrawal volume
-42
0
0
-42
Average withdrawal value +14 +15 -1 +30
Swipe

Faster payment (NPP) transactions

Swipe
  Sep 2020 - Sep 2021
(%)
Sep 2021 - Sep 2022
(%)
FY21 V FY22
Faster Payment volumes
+47 +28 +18
Swipe

About Bankwest
Bankwest’s vision is to deliver brilliant customer experiences every day and our purpose is to build a brighter future for all. Bankwest provides personal and business banking solutions for customers across Australia. Our customers enjoy access to an extensive network of branches and business centres, direct and third-party distribution channels, agencies and electronic banking facilities, as well as 24-hour banking on the telephone, internet and app. Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit license 234945.
 

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