Changes in US payment behaviour during COVID-19: Differences by income and demographics

Changes in US payment behaviour during COVID-19: Differences by income and demographics

Claire Greene, Ellen A. Merry, Joanne Stavins

Working paper

Journal of Payments Strategy & Systems Volume 17 Number 3

2023

The COVID-19 pandemic caused large changes in consumer spending, including how people make their payments. For employed consumers, the pandemic also changed workplace behaviour, with about one-third of workers continuing to work from home every day as of September 2020. Using data from a nationally representative survey of US consumers collected before and during the pandemic, this paper analyses changes in workplace and payment behaviour during the pandemic. The study finds that, compared with their payment behaviour in 2019, consumers had shifted some of their purchases from in person to online by the autumn of 2020, significantly reduced their use of cash for purchases, and shifted their person-toperson (P2P) payments away from paper-based instruments (ie cash and cheques). These changes are consistent with what we might expect, as many people were less able or willing to shop in person. The adoption of electronic P2P payments increased, especially the use of payment apps such as PayPal, Venmo and Zelle. In comparison with consumers who worked at least partly in person, consumers who worked exclusively from home during the pandemic made a significantly higher proportion of their payments online or through mobile devices, and were less likely to use cash at all, even after controlling for income and education levels. In contrast, payment behaviour changes that took place from 2018 to 2019 were smaller in magnitude and largely insignificant, suggesting that COVID-19 likely accelerated any longerterm trends.