While most retail segments have been pumelled by the Coronavirus lockdown, alternative transactional systems such as Paypal digital payments and Buy Now Pay Later (BNPL) installment payments have surged, leading to a probably permanent change to the way consumers pay for retail goods and services.
PayPal has announced that customer sign-ups are triple pre-pandemic levels in Australia, with 65 percent more Australians 50 years and over signing up during the lockdown and a 54 percent increase in payment volume to Australian small businesses.
Paypal is claiming that the pandemic has accelerated Australia’s shift to become a cashless society by up to 5 years.
PayPal customer sign-ups in Australia almost tripled during April compared to pre-lockdown levels. There are now over 8 million active PayPal accounts in Australia, close to a third of the population.
‘The social distancing required to fight COVID-19 has accelerated the move to digital payments by up to five years in the space of a couple of months,’ said PayPal Australia CEO, Paul Ryan. ‘There are clear signs that this shift to digital services will be lasting. Even though some consumers may revert to their old shopping habits, increased use of ecommerce will be the new normal in Australia.’
A survey conducted for PayPal found that a third of the people who began online grocery shopping during the pandemic will continue to do so after restrictions are lifted.
‘We’ve reached a tipping point where digital payments are now an essential service, rather than just a nice to have.’
During the pandemic PayPal Australia saw categories that represented everyday essentials perform strongly including groceries, meal deliveries, alcohol, subscription services, education, entertainment and home improvement. Online marketplaces also experienced an increase in consumer demand, as well as food delivery platforms such as Mr Yum and Uber Eats.
The surge in interest in BNPL systems is best illustrated by the phenomenal share price growth in Afterpay and smaller competitor Zip. Afterpay is up over 100 percent over 12 months and over 400 percent since the market bottomed on March 23.
The share price for Zip has only been slightly less spectacular, with a surge of over 300 percent since late March.
Zip’s chief commercial officer, Hamish Moline said the business has ‘probably seen the biggest shift in consumer behaviour we’ve seen in a long time’, over the past few months, marked particularly by a ‘shift away from traditional ways to pay’.