During epidemic changed payment patterns of consumers

The spread of Covid-19 and comprehensive preventive measures to contain it have been reflected in part in the payment patterns of consumers at points of sale. In a special analysis, Banka Slovenije finds that the behavioural patterns of consumers in connection with the use of cash and payment cards from the first wave of the epidemic have been largely repeated during the second wave: the amounts of individual withdrawals at ATMs, which are now used less often, have risen, the use of payment cards has declined due to the partial closure of the economy, and the proportion of online purchases has risen. The only exception is demand for cash for precautionary reasons. That demand rose sharply during the first wave of the epidemic, while consumers have responded more calmly during the second wave.

Banka Slovenije has expanded the period covered by its analysis of the impact of the Covid-19 epidemic on patterns of card payments and the use of cash, which was published in June 2020. This analysis also focuses on the amount of net cash issuance (i.e. the amount of cash issued into circulation minus the amount of all cash returned from circulation), cash withdrawals at ATMs and card payments. The expanded analysis, which covers the period from 1 February until the end of 2020, indicated that certain trends that emerged during the first wave of the epidemic have repeated themselves during the second wave.

Demand for cash rose sharply, following the first declaration of the epidemic in Slovenia, particularly in terms of cash as a store of value. The largest increase in demand for cash during the aforementioned period was seen immediately after the epidemic was declared on 12 March 2020, when people rushed to the shops to buy essentials before the lockdown began. In contrast, Banka Slovenije has not seen a renewed rise in demand for cash for precautionary reasons; demand has remained close to the level recorded before the declaration of the epidemic in the spring. The only exception was during the December pre-holiday season, when we typically record increased demand for cash, which was accompanied last year by the temporary easing of restrictive measures.

Focusing on another category, our analysis indicates a change in the behaviour of consumers with regard to withdrawals at ATMs during the epidemic. The behaviour of the citizens during the second wave is similar to the first wave: people are making fewer visits to ATMs (the weekly average number of withdrawals in the period between the two waves of the epidemic was 929 thousand, compared with 692 thousand during the first wave and 682 thousand during the second wave), which is being offset by larger average cash withdrawals (the average individual withdrawal amounted to EUR 134.3 EUR in the period between the two waves of the epidemic, compared with EUR 152.8 during the first wave and EUR 152.6 during the second wave).

Similarly, our analysis of payments with payment cards and card transactions indicated a repetition of the trend from the first wave. Both the number and value of card transactions fell (to around 474 thousand daily transactions with a daily value of close to EUR 16.8 million) following the declaration of the first epidemic in the context of the partial closure of the economy, but neared the average values recorded prior to the first lockdown (around 677 thousand daily transactions with a daily value of close to EUR 21.7 million) during the summer months. In the period from 19 October until the end of the year, those values fell again (to around 544 thousand daily transactions with a daily value of close to EUR 18.5 million). However, the stringent restrictions imposed in October did not result in such a sharp increase followed by a fall in the number and value of card transactions as in the first lockdown. This can be explained by the reduced scope of panic buying relative to the first wave, as people reacted more calmly after facing a similar situation in the recent past. Also contributing to this was the fact that activities were locked down gradually during the second wave.

There was a change in the ratio of card payments at physical points of sale to card payments for online purchases in both the first and second waves of the epidemic. Our analysis indicated that following a sharp increase in the proportion of card payments for online purchases during the first wave (to 12% in terms of the number of transactions and 16% in terms of value), the proportion between the two waves returned to a level similar to the level prior to the first wave (to 8% in terms of the number of transactions and 11% in terms of value). The increase in the proportion of card transactions for online purchases was even sharper following the imposition of new restrictive measures (to 14% in terms of the number of transactions and to 20% in terms of value). The only exception was during the December pre-holiday period when measures were temporarily eased. At that time, the proportion of card transactions for online purchases reached (and on certain days even exceeded) the proportion recorded during the period of less stringent restrictive measures.

Banka Slovenije helped to ensure the smooth functioning of cash and payment systems during the first and second waves by implementing the appropriate preventive measures. The aim of those measures was to avoid any disruption to private payment systems and the related infrastructure, and to ensure the smooth supply of cash to the market.

Publication is available on the link.