March 16, 2021
March 16, 2021
Findings Suggest the Increase in Digital Payments Sparked by COVID-19 Is Here to Stay
Today, Square, Inc. (SQ) released a new report highlighting the impact of COVID-19 on global commerce and payments behavior. One year after the onset of the pandemic, the steady increase in cashless adoption rates and online and contactless payments demonstrates a renewed preference toward digitization among business owners and consumers. This is the fourth installment of Square’s Making Change series, which examines whether or not we’re headed toward a cashless society.
From pre-pandemic 2020 to today, we’ve seen the share of cashless businesses(1) more than double in the U.S., Australia, Canada, and the UK, and nearly double in Japan. In February 2020 in the U.S. alone, just 6.3% of Square sellers were cashless businesses, which jumped to 14% by February 2021. During that same period, the share of cash transactions decreased from 37.4% in February 2020 to 30.5% in February 2021.
Following U.S. businesses that have been with Square since 2015, we saw a slightly more substantial dip in cash usage during 2020, which indicates the shift away from cash this past year would have taken nearly three years without the pandemic.
Square Economist Felipe Chacon explains, “A year ago, there was no telling whether the sudden spike in cashless businesses and digital payment options was going to last. But today, we can look to markets where the pandemic has largely been eradicated, such as Australia, and see that the increase is sticking with business owners and consumers beyond the pandemic.”
We worked with Shelle Santana, Assistant Professor of Marketing at Bentley University, to lend her perspective on the ever-changing state of commerce. “It’s important to balance this past year’s universal increase in cashlessness with the fact that cash usage is still pretty resilient. In the summer of 2020, some people were wondering whether cash would become a relic of the past out of sheer necessity. We see now that even though cash transactions are declining, they still represent about 1 in every 3 transactions in the U.S. That’s not insignificant.”
From February 2020 through February 2021, both online and contactless(2) payment options became increasingly popular among business owners and consumers alike:
Despite the widespread growth in digital payment methods this past year, survey results from Wakefield Research serve as a reminder that a less-cash society is not necessarily indicative of a cashless one:
(1)Cashless businesses are defined as those that are accepting 95% or more of payments via cashless methods (in-person debit, credit, or contactless payments; Square Online payments; or card-not-present payments).(2)Defined as payments made in person with a contactless reader using a credit/debit card or mobile device.
Square, Inc. changed its name to Block, Inc. on December 1, 2021.
Block, Inc. (NYSE: SQ) is a global technology company with a focus on financial services. Made up of Square, Cash App, Spiral, TIDAL, and TBD, we build tools to help more people access the economy. Square helps sellers run and grow their businesses with its integrated ecosystem of commerce solutions, business software, and banking services. With Cash App, anyone can easily send, spend, or invest their money in stocks or Bitcoin. Spiral builds and funds free, open-source Bitcoin projects. Artists use TIDAL to help them succeed as entrepreneurs and connect more deeply with fans. TBD is building an open developer platform to make it easier to access Bitcoin and other blockchain technologies without having to go through an institution.