Contactless payments gaining further ground during the COVID-19 crisis

COVID-19 caused a dip in payments

Figure 1 shows the value of point-of-sale and online payments derived from payment diary data kept between 1 January and 1 July 2020. The initial weeks of the lockdown were marked by plummeting payment transactions, in terms of both numbers and value, with point-of-sale payments showing the sharpest decline. April saw payments recover as economic activity rebounded and consumers returned to retail outlets and online shops. The resurgence showed such strength that, by May 2020, the value of aggregate point-of-sale and online consumer payments had returned to the level seen in the same month in 2019. In June 2020 it was in fact 15% above that in June 2019. From April onwards, the rebound in payments could be observed mostly for online and debit card payments, and from June onward also for cash payments. 

Figure 1 - Monthly value of point-of-sale and online payments

Source: Payment diary data kept by DNB and the Dutch Payments Association and debit card data by the Dutch Payments Association.

Payments shifted from contact-based to electronic transactions

Consumers increasingly switched to contactless transactions using their debit cards or smartphones during the lockdown, at the expense of cash payments (see Figure 2). This was driven in part by measures which Dutch banks had taken to simplify contactless payments in order to prevent infection through manual contact. For example, they increased limits for contactless payments above which consumers were required to enter their PIN. At the start of 2020, the proportion of cash in the total number of cash and debit card payments at points of sale still stood at 30%. Bottoming out at 13% on 12 April, cash transactions rebounded to 23% at the end of June, still below pre-pandemic levels. While the decrease in cash use is seen across all age groups, it is more marked among those between 12 and 34 and those above 65 than among those between 35 and 64. 

Figure 2 - Choice of means of payment at points of sale

Source: Payment diary data kept by DNB and the Dutch Payments Association.

Confidence in the payment system remained high

Public confidence in the payment system held up well during these turbulent times (see Figure 3). The average Dutch consumer remains mostly or fully confident that Dutch banks would ensure smooth payments. The rating they awarded averaged 4.3 out of 5, unchanged from that observed at the start of the lockdown. This means Dutch consumers on average are still happy about the payment system, and the slight dip in confidence seen just before the lockdown proved to be short-lived. This testifies to the effectiveness of the measures the Dutch banks have taken to simplify contactless payments. 

Figure 3 - Confidence in the payment system

Source: Payment diary data kept by DNB and the Dutch Payments Association.