Will Consumers’ Payment Habits Return to Their Pre-Covid-19 Patterns?

Before being upended by the Covid-19 pandemic, the payment choices U.S. consumers made were fairly stable. The biggest changes from 2018 to 2019 were an upswing in online bill payments and continued slippage in cash usage, according to new findings from the Federal Reserve Bank of Atlanta.

Based on a nationally representative poll of nearly 3,400 consumers, the Atlanta Fed’s latest Survey of Consumer Payment Choice released last week found that the average number of payments per consumer per month was 68.5 in 2019. Debit cards once again were the most popular payment instrument, a title they’ve held since 2010. In a typical month, consumers on average made 24 debit card payments for 35% of all monthly payments. 

Consumers used credit or charge cards 17 times for 24% of all payments, and cash for 15 payments, or 22% of the total. Credit cards surpassed cash in payment share for the first time in 2019, according to the Atlanta Fed. Additionally, consumers made three check payments per month on average last year, for 4% of all payments. They made eight payments directly from a bank account via the automated clearing house network or online-banking bill payments, for 12% of monthly payments.

By and large, there was little change in the share of payment instruments last year from what the Atlanta Fed found in its equivalent 2018 survey. Nor were there notable changes in the shares of consumers who bought goods or services online or who made a mobile payment. The only statistically significant changes were a 2 percentage point decline in cash’s share of payments and a small, 0.5 percentage point increase in the share of payments via online-banking bill pay.

“Consumer payments is a habit and, like lots of habits, slow to change,” Claire Greene, a payments risk expert at the Atlanta Fed and one of the researchers who oversaw the study, tells Digital Transactions News by email. “In the survey results, there doesn’t tend to be a lot of statistically significant change from one year to the next. So this is not surprising.”

One big question now is whether consumer payment patterns will revert to something resembling 2019 once the Covid-19 pandemic eases. With consumers stuck at home, e-commerce, contactless payments, and online ordering from restaurants has boomed. “So much is in flux,” Greene says, that it’s too early to say, especially considering all the things that go into payment decisions—employment and income status, shopping choices, payment-instrument choice, and authorization method, such as tapping a card or mobile phone or using an app.

“Right now, there is a powerful incentive for behavior change,” she says. “Later, considerations other than public health could come into play, for example, cost, merchant acceptance, return to past commuting patterns, preferences for dining out versus takeout, etc., etc., etc. On the other hand, a lot of people are learning new ways of conducting everyday activities and presumably some of those new ways will stick for some people.”

The 2019 Survey of Consumer Payment Choice was the fifth conducted using the Understanding America Study managed by the University of Southern California’s Dornsife Center for Economic and Social Research. Of the 3,372 respondents in 2019, 2,021 also responded to the 2016, 2017, and 2018 surveys.