Fears surrounding the impact of coronavirus (Covid-19) have already significantly impacted the global economy. A similar trend is expected in New Zealand’s tourism industry, which is the country’s biggest revenue contributor, due to overall decline in consumer spending. As a result, it will have a significant impact on the country’s payments industry, says GlobalData, a leading data and analytics company.

According to GlobalData’s report, ‘Covid-19 Impact on the Payments  Industry: New Zealand Forecast Snapshot’, tourism accounts for 230,000 jobs, 21% of foreign exchange earnings and 5.8% of GDP.

Ravi Sharma, Senior Banking and Payments Analyst at GlobalData, comments: “Covid-19 has significant knock-on effect on travel, gambling, wholesale and hospitality spend. The steep drop in consumer spending will have a significant impact on the payments industry.”

As a result, GlobalData has revised its payments forecasts to see total transaction value decline very slightly by 0.1% in 2020. This is driven by a much larger decline of 4.3% in the value of cash ATM withdrawals.

Sharma continues: “While cash is likely to take a back seat in the short-term, the usage of contactless cards will grow. The temporary increase of the contactless payment limit form NSZ$80 (£53.96) to Z$200 ($134.89) will further boost digital payments.”

Another contributing factor in the increase of digital payments and decline in cash is the rise in online payments.

Sharma concludes: “The overall decline in consumer spending will partially be offset by a rise in online spending as wary consumers stay at home and use online channels to purchase essential goods. Consumers are opting for online payments to avoid busy places and because stores are running out of stock. “Furthermore, in-store customers are increasingly using digital payments in a bid to avoid disease vectors, such as cash and POS terminals. As a result of this, we expect mobile phone payments to increase.”