The New Payments Platform posted a record month of transaction activity in May as Australian consumers increased their use of Osko payments and online shopping sites.
Reserve Bank monthly payments data show that the NPP handled more than 40.8 million transactions in May – a rise of 9 per cent from April.
While the transaction activity was a record, the total value of NPP transactions was $41.6 billion – less than the $43.6 billion posted in March before the pandemic creased the economy.
Most payment methods increased activity in May following the dramatic slides recorded in April.
However, only NPP-enabled payments and debit card transactions recovered sufficiently to eclipse volumes recorded a year ago. More than $30 billion was spent on debit cards in May – up almost 10 per cent on the same period last year.
Although spending on credit and charge cards rose in May, this market segment recorded a 21 per cent decline in volumes compared to same month in 2019.
Australians wrote $27.2 billion worth of cheques during the month – down a massive 43 per cent on a year ago.
They also withdrew less cash from automated tellers this May compared to last year, with the aggregate withdrawals of $7.6 billion representing a 30 per cent slide.
It is debatable whether cash usage will remain at such low levels when the effects of the Covid-19 crisis dissipate.
Recently published payments data in the US indicates that consumers increased their use of cash after the re-opening of retail stores in June.
Payments expert Grant Halverson said the shift in the US back to physical realm shopping suggests that consumers are more enamoured by in-store shopping experiences.
This could have implications for the ambitious forecasts of e-commerce spruikers who have already declared that cash is dead.
“The notion that e-commerce has permanently displaced in-store shopping doesn’t fit with payment history,” said Halverson.
“If you look at events that have disrupted payments platforms in the past such as the Italian earthquake in 2016, people tend to change their payment behaviour for a period of time and then they swing back.
“I think e-commerce will emerge from the pandemic with a higher level of activity but it is likely to come off recent peaks.
“When retail stores reopen people will prefer to go out and shop.”
Halverson believes the decline in credit card activity is likely to continue.
“There has been a decade-long slide in credit card volumes and the pandemic has merely intensified the long term trend,” he said.