COVID cash crunch as cards reign supreme in lead up to Christmas

COVID is driving up contactless payments, with retail spending through the Tyro network up 20pc, revealing pent-up demand.

The pandemic has fuelled a surge in contactless payments. Picture: iStock

December has been a boom month across Tyro Payments networks, with Australians dropping $2.23bn in the weeks leading to Christmas, as pent-up pandemic demand exploded.

With the end of the year in sight, spending across Tyro payments platform is up almost 21 per cent on 2019, in a dramatic turnaround from the darkest days of lockdowns earlier in the year.

The data from Tyro, which provides services through its Eftpos payments platform to over 32,000 businesses, is a good indication of consumer spending trends across the year.

Tyro is the next largest payments provider after the big four banks.

The near-final data for 2020 shows how many Australians have shunned cash, shifting payments to cards as shoppers change long-held spending habits.

The spending data comes after a wild ride for Australian consumers throughout 2020, with payments recorded by Tyro in April crashing 38 per cent below their levels in 2019.

The pandemic’s impact continued in May, when payments were 18 per cent below their 2019 levels. Falls were repeated in August as Victoria slipped into its second wave and lockdowns, with payments declining 4 per cent.

Despite spending slipping in August, the first half of the financial year looks set to close up 9 per cent on 2019, with $11.715bn recorded surging through Tyro’s payments platforms.

The post-Christmas close may point to a turnaround in some retailers and hospitality venues’ fortunes, with many having suffered after operations were disrupted by the pandemic.

Social distancing requirements and intermittent restrictions and lockdowns have played havoc with many businesses.

Businesses will be closely watching the pandemic’s impact on spending on New Year’s Eve, one of - if not the biggest - night for entertainment and hospitality spending of the year.

Moves by the NSW government to restrict gatherings in the centre of Sydney may crimp any spending recovery for businesses already suffering from the COVID-caused crash.

Tyro CEO Robbie Cooke said the company’s payments data showed economic recovery was proving strongest in Western Australia and Queensland.

“It’s partly reflective of those businesses coming back to life, retail is stronger, hospitality is a little bit behind pre-COVID levels” he said.

“On a same-store basis we’re seeing many stores getting back to or above where they were pre-COVID.”

Mr Cooke said Tyro would keep reporting its transaction data until its results were reported in August 2021, in recognition of the uncertain economic environment.

“The volatility through the COVID period is something I’ve never seen before which is why we took the decision to update the market on our trading performance,” he said.

“Our working assumption is there will be pockets of COVID next year, but governments are capable of controlling that and clamping down where it needs to be clamped down.”