PROVIDENCE – The COVID-19 pandemic ushered in new spending habits for consumers, many of whom made the switch to online purchases and banking services, as well as cards over cash, according to a new report from the Federal Reserve Bank of Boston.
The report is titled “Has COVID Changed Consumer Payment Behavior?” and compared results of the Federal Reserve’s annual Survey of Consumer Payment Choice in 2019 to the results of 2020.
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Among the findings was the increasing popularity of buying online, with increases both in the number of people who bought at least one thing online in October 2020 compared with October 2019, and an increase in the average number of monthly online purchases.
New screen habits also translated to banking, with adoption of mobile banking increasing 5 percentage points to 64% and online banking increasing 4 percentage points to 79%. Mobile apps featured heavily in this rise, particularly in electronic person-to-person payment services such as PayPal, Venmo and Zelle, usage of which nearly doubled from 2019 to 2020, according to the study.
In-person purchases did not fall by the wayside. However, the way people paid for them changed, with cash purchases declining and a corresponding rise in card payments.
Forced lockdowns and new lifestyle habits – including working at home – were major contributors to these changes in spending habits. Consumers who worked from home were significantly more likely to make online purchases and had a higher share of purchases made online than those who worked outside their homes, the study found.
Both women and those with higher education and income levels were also more likely to buy online, and to use cards over cash when paying in person, according to the study.
The increasing prevalence and adoption of online technology, even before the pandemic, makes it difficult to attribute these changes to COVID-19 entirely, the Federal Reserve said. It’s also unclear how much these new spending habits will stick after the pandemic subsides, the report stated. It is “likely,” however, that the pandemic accelerated technology adoption potentially in a lasting way, akin to how the Sept. 11 attacks spurred the implementation of digital checks, according to the report.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
