14 May 2020
Posted in Banking
Lack of consumer spending and fear of cash hit Ireland’s payments industry, says GlobalData
Ireland’s payments sector is feeling the impact of COVID-19 as cash payments have declined by 57% in the month to the first week of April 2020. According to the revised payments market forecasts on the country, the total value of payments are expected to rise at a compound annual growth rate (CAGR) of 3.3%, down from 6.3% previously, by 2023 until then. This is largely down to cash ATM withdrawals forecasts changing from 0.8% to -2.2%, says GlobalData, a leading data and analytics company.
Ravi Sharma, Payments Analyst at GlobalData, comments: “The fear of the potential spread of COVID-19 through cash handling will push the contactless payments in the country. This will be supported by the recent rise in contactless spending as well. Consumers will learn behaviors, such as contactless and mobile payments, which is likely to continue even after the pandemic and accelerate the gradual decline in cash usage.”
Ireland is particularly reliant on its tourism sector, which has come to a halt due to the pandemic. According to GlobalData’s 2019 Banking and Payments Survey, travel and accommodation accounted for 36% of the country’s total credit card transaction value in 2019. Ireland’s central bank expects the distribution, transport, hotels and restaurants to be the worst hit.
Sharma concludes: “COVID-19 will have a significant effect on consumer spending. Loss of income and increased unemployment due to the lockdown will have long-term implications affecting several sectors. The reduced economic activities are already showing impact on card spending.
“The number of debit payments decreased by 33.6% and 29.0% in the month to the first week of April, in terms of volume and value, respectively, according to the Central Bank. However, card usage is expected to recover once the lockdown is lifted.”