COVID-19 Impacts to Spend Behaviour
[15 July 2020] As a result of the COVID-19 pandemic, both necessity and fear have resulted in changes to how credit union members use their money. The shift from contact payment methods (chips and cash) to digital payment options (contactless, mobile, e-Transfer and IOP) is evident when we look at a year-over-year analysis of payment services volumes under the CUCC Interac membership. The shift from contact payment methods (such as credit card chips and cash) to digital payment options (contactless, mobile, e-Transfer and IOP) is evident when we look at a year-over-year analysis of payment services volumes under the CUCC Interac membership.
Cash is neither King, nor Queen. Looking at year-over-year volumes for January and February, the number of ATM transactions by credit union members held steady. The months of March through May saw a 46% decline in ATM use among credit union members over the same period the previous year. Other FIs have seen a comparable drop. There is evidence, however, that members making those cash withdrawals aren’t quite ready to give up on cash. While the amount of cash withdrawn has dropped 38%, the average withdrawal is up 16% from the same period last year.
Online and in-apps is where it’s at! The need to move money and transact at a distance has resulted in tremendous increase in Interac e-Transfer®, Interac® Online Payment (IOP) and mobile in-app volumes. The March to May increase has been nearly 50% for e-transfer and a whopping 150% for IOP. The most dramatic uptick has been on the mobile front with in-app transaction volumes 8.5 times greater in 2020 than the same period in 2019.
Use of debit has declined. With a shift to online and in-app purchasing, it’s no surprise that debit volumes have declined. Debit card usage by credit union members is down 17%, with a 10% reduction in the dollars spent. While this decline is less than that seen by the rest of the industry it is still significant and reflective of the limitations when using debit as an online payment option.
Contactless spending is dominating debit. Credit union members do like to transact with their own money, but they don’t want to touch a terminal to do it. Contactless card and mobile transactions accounted for 62% of debit transactions March through May, but only 32% of the dollars spent. This is up from 52% and 26% for the same period in 2019. Higher dollar volumes with chip are not unexpected, as limits imposed on Interac Flash transactions with traditional debit cards force the member to complete $100+ transactions via chip or mobile. As more members transition to mobile, we may start to see shifts in amounts to be more in line with the number of transactions. Other FIs have seen similar shifts, however credit union members are ahead when it comes to comfort with Interac Flash®.
*Services under the CUCC Interac membership include debit and ATMs for Co-operative Node credit unions, e-Transfer and IOP.
