Payments company Square released a report that shows the impact the COVID-19 pandemic has had on Australia’s intensifying relationship with contactless payments. There has been a cashless growth spurt among Australian businesses since the onset of the pandemic, with 1 in 4 businesses now operating as cashless, compared to just 1 in 12 this time last year. 

The report, entitled Payments and the Pandemic, looks at the effects of mandated lockdowns, social-distancing limitations and ongoing trading restrictions on consumer and business behaviour in relation to payments. The data was captured from millions of transactions at thousands of Square businesses across the country over the past 12 months.  

“As the COVID-19 pandemic swept across Australia last year, we saw a sharp decline in cash use as businesses and consumers became more reluctant to physically handle money at a time when health, and mitigating the spread of germs, was their top priority,” said Samina Hussain-Letch, Head of Industry and Payments at Square Australia. “And while some regions and industries are starting to see cash pick up in circulation again, we are yet to see it return to pre-pandemic levels.”

Square’s data shows that regionally, Victoria saw the most significant rise in the number of cashless businesses operating throughout 2020. While just 5% of the state’s businesses were operating as cashless in February last year, this grew to a peak of 40% in April and then again in August 2020, coinciding with the state’s two lockdown periods. While the number of cashless businesses in the Northern Territory still doubled over the course of 2020, this region saw the least dramatic shift in businesses turning away from cash.

For consumers, the number of people opting to pay with cash plummeted by more than half throughout the year. In February 2020, 36% of all in-person transactions were made in cash, compared to just 15% by April during the pandemic’s first wave. As of February 2021, cash use had increased a little but only made up 18% of all in-person transactions. 

Across the states, Tasmania and the ACT saw the most significant decline in cash use among consumers, while Western Australia and the Northern Territory saw the smallest shift. As of February 2021, Victoria and Western Australia had the lowest rates of cash use in the country (15%), while South Australia and the Northern Territory had the highest (22%).

Brittany Garbutt, Owner and Managing Director of National Chain Pretzel, says the change in consumer behaviour is evident across Australia. 

“Over the past year, our east coast stores have been more impacted by COVID-19 restrictions than our west coast stores, but the shift away from cash use is definitely felt everywhere,” said Garbutt. “Even in our stores that remained open to in-store customers throughout 2020, like Perth, there was still a huge shift in consumers opting to pay contactless. With health concerns top of mind, people just don’t want to handle cash that others have touched — and honestly neither do we.” 

With online ordering, contactless payments, curbside pickup and no-contact deliveries becoming the norm for consumers across the country throughout 2020, Square’s data also shows that the share of Australian businesses accepting online payments on the platform has increased more than 1.5 times over the past year.

“Consumers have become accustomed to the ease and convenience of eCommerce over the course of the pandemic. This is likely a key factor contributing to the continued low levels of people paying with cash, despite restrictions being eased across the country,” said payments expert Professor Steve Worthington from Swinburne University Business School. 

“A preference to minimise contact with physical currency is likely to be top of mind for consumers for quite some time. What’s more, with bank branch closures and fewer ATMs available, it has become more difficult to access cash and then to find places to spend it,” said Professor Worthington. “Combining that with the fact that many businesses favour digital payments for ease of use, speed and security, there’s less incentive for any of us to carry cash now.”

The full report can be viewed here.