Purchasing in a Pandemic

The COVID-19 pandemic has clearly had a major impact on U.S. consumer lifestyles and purchase behavior, including how, when and where consumers are making purchases. Many consumers expect changes in their purchase behavior will be here to stay, even after the seemingly never-ending pandemic subsides. Visa Consulting & Analytics (VCA) and payments industry consultancy The Strawhecker Group (TSG) teamed up to survey U.S. consumers as well as analyze Visa’s spending data to understand the impact to this behavior.

Lifestyles Are Disrupted

Purchasing, like nearly everything else in a pandemic, looks different. Forty-eight percent of consumers surveyed decreased their overall spending since the pandemic started, while 28 percent of respondents increased their overall spending. The places consumers spend, the channels they use, and the methods they choose for payment are shifting and leaning digital.

Cards Over Cash

Consumers have been changing what payment options they reach for to make purchases. Twenty-six percent of consumers surveyed expect to use less cash after the pandemic ends than they did before, though 18 percent expect their use of cash to increase after the pandemic ends. Additionally, 27 percent of consumers surveyed expect to use credit and debit cards more after the pandemic ends than they did prior.

Contactless Payments Accelerate

The pandemic has spurred contactless card usage — i.e., cards that can just be hovered over a payment reader to make a purchase. Forty-one percent of consumers surveyed stated they have a contactless credit/debit card, and of those respondents, 60 percent use their contactless card to make at least half of their purchases. Additionally, 55 percent of consumers surveyed expect to use contactless cards more after the pandemic than before. Germ avoidance may be a reason why many consumers are choosing contactless; 60 percent of respondents believe that contactless payments are safer in terms of spreading the COVID-19 virus. The survey also showed an uptick in planned digital wallet usage.

Industry Impact Varies

Shifts in spending has varied across industries. Online purchases in general, and certain categories like grocery, have mostly been positively impacted in terms of spending during the pandemic. According to Visa data, industries such as department and apparel stores, business supplies, and the automotive category saw declines in spending ranging between 10 percent to 50 percent in April 2020, but by June 2020, those industries had all recovered to spending growth.

Travel industries like airlines and hotels, as well as personal services and general retail (excluding curbside pickup orders) have mostly seen a negative impact in spending since the pandemic.

Consumers Fall Into 2 Camps

The consumers surveyed vary in their sentiment on when they feel they can resume a normal lifestyle, and they generally fall into two categories: those that are comfortable now and those that are not.

Consumers are currently most comfortable with social activities such as smaller events and being outdoors. Forty-one percent of consumers surveyed are comfortable resuming their normal lifestyle now, including those that are comfortable if they at least take protective measures such as social distancing. Fifty-nine percent of consumers surveyed will not be comfortable until additional progress is made to alleviate the pandemic (such as a vaccine), with 18 percent of that group not sure if they will ever be comfortable to resume their pre-pandemic lifestyle again.

There’s a New Purchasing Persona

Many consumers expect to maintain socially distant shopping behaviors (e.g., grocery delivery) even after the pandemic ends. To serve the new consumer persona, businesses should continually be moving to adopt technologies and formats, such as delivery services, contactless payment acceptance, and e-commerce channels.

See more of the survey results in this infographic.

Trevor Forbes is the director of market intelligence at The Strawhecker Group, a management consultancy that encompasses the full spectrum of advisory services within the global payments industry.