The rapidly rising number of coronavirus (COVID-19) cases in the US has caused an economic slowdown in the country, which has resulted in the number and value of expected transactions being significantly reduced – largely due to a substantial fall in cash transactions, says GlobalData, a leading data and analytics company.

Pre-COVID-19, GlobalData forecasts saw total transactions rising at a compound annual growth rate (CAGR) of 7.6% between 2019 and 2023. However, this has now been revised to 4.5%, mainly due to the CAGR for cash payments dropping from 2.5% to -1.5% in the same period.

Ravi Sharma, Banking and Payments Analyst at GlobalData, said: “The decline in overall spending will be somewhat offset by a rise in online payments. Wary consumers will stay home and use the online channel to purchase goods in order to avoid exposing themselves to the disease.”

GlobalData forecasts predict steady declines for cash payments up to 2023, but card payments will witness a consistent increase, albeit at a slower CAGR than originally predicted before the pandemic. Growth will be slowed by availability of goods and many vendors closing.

However, COVID-19 is likely to have a lasting impact on consumer behavior, as mobile wallets and especially contactless payments will likely be more widely used.

Sharma adds: “While the uptake of contactless card payments in the US has been relatively slow, this crisis should give a push to these payments, since they allow consumers to avoid handling cash or point-of-sale terminals.”