You don't need to be a data scientist to assess the disruptive impact of COVID-19. But it's nice when the facts support the intuition. Analysing payments data is a useful place to start.

COVID-19 Effect – The Proof is in the Payments

There is a great scene in Good Morning Vietnam where Robin Williams is reading the weather report and throws to Roosevelt – one of his characters – asking for a local weather update. The reply is, “You’ve got a window. Open it!”

The same could be said for anyone trying to interpret the economic impact of COVID-19. You look out of the window and there is no traffic. You look up in the air and there are no airplanes. You walk past shops and there is no one in them. It doesn’t take an Econometrician to recognise the challenges we are facing. But for those who like their “gut feel” backed up with data, there is no better place to start than following the money.

This post is a brief summary of how the RBA’s payments data tell the COVID-19 story. But first it is important to understand the payments context.


Prior to COVID-19 there was a consistent, long-term trend of people and businesses switching away from physical payments instruments like cash and cheques to electronic payments.

There were some interesting sub-trends. Cheque volumes have been in long term decline at about 13% p.a. for most of the century. In the early years this was heavily driven by commercial customers – taking advantage of the lower cost and convenience of predominantly internet banking payments. As personal customers also moved away from cheques, bank cheques accounted for a greater share of the overall transaction value – from 18% to 55% by 2017. Bank cheques were typically used for purchases such as car sales and property settlements. This changed in 2017 as PEXA’s electronic property exchange gained momentum. They have now made over 5 million payments and settled more than $900 billion of property via their electronic exchange.

ATM cash withdrawals continued to grow in the first part of the century – even allowing for underlying population growth – but peaked at the time the GFC hit. The average adult now only withdraws cash from an ATM every fortnight, down from a weekly visit ten years or so ago. 

If customers are moving away from physical payment instruments, where are they moving to? The short answer is debit card – and in a big way. Not only did customers switch they also doubled the number of transactions they made.

The other significant change has been the introduction of the New Payments Platform (NPP) for near real time retail payments. Launched in February 2018 both volumes and the average transaction size have grown steadily. Even continuing to grow during the key March to May 2020 COVID-19 period.

Speaking of COVID-19!

NPP payments were a definite outlier! By April 2020, payment volumes overall were down 17% relative to December 2019 – 13% more than usual.

By April 2019, the reduction in activity had hit all payment types – except for NPP. The contagious nature of the virus and the focus on hand hygiene is evident in the reduction in ATM withdrawals as customers switched from cash to contactless and other electronic payments.

What is particularly interesting is how the data supports the anecdotal evidence. Credit card usage fell significantly in terms of volume and transaction value – reflecting a more conservative “don’t spend what you haven’t got” mindset. Whereas debit card usage highlights the move from in-store (card present) to online (card not present) purchasing. Apart from customers ransacking supermarket shelves in search of the last pack of toilet paper, bricks and mortar retail was hit hard while internet purchases have fared far better. This supports the many stories of bricks and mortar retail stores pivoting to focus on their internet sales channel.

The travel bans and requirements for Australians abroad to return are also borne out by the data. The number of cash withdrawals by Australians overseas has more than halved, while cash withdrawals by visitors to Australia have fallen by 80%.

It is a similar story with card purchases. Australians overseas have reduced their spending by 20% in volume terms and the average transaction value is down by 32%. For overseas visitors, their volume has almost halved although the average value has increased slightly by 7%.

The travel impact probably plays a role in the reduction in activity for corporate and commercial cards as organisations switched to work from home and introduced their own travel bans. In volume terms corporate and commercial cards sustained a more significant impact than personal cards, yet the average transaction value was 15% higher. There is a similar story in the Direct Entry (DE) data. While it is harder to separate personal from commercial payments in the DE clearing stream – a stream that typically accounts for wage and salary payments, dividends, invoice payments etc – there is a similar story of lower volumes, but higher average transaction values (-8% and 9% respectively). This may indicate some stocking up on behalf of businesses before dramatically reducing activity. 

Increased market activity can be seen in the RTGS data with both an initial spike in volumes and values, before lapsing into the overall reduction in activity seen across the broader economy. Year-on-year RTGS volumes had been growing at 5% p.a. for the last decade, albeit slowing in the second half to 2%. In aggregate the figures are eye-watering – an additional $1.5 trillion was transacted over RTGS in March 2019 relative to February 2019, with SWIFT payments up 21% and Austraclear (used for bond related transactions) payments up 28% over the month.

On a positive note, in a world obsessed with fake news, from this simple analysis, it would appear that so many stories we have seen in the news over the last few months seem to be grounded in fact as far as Australia’s payments data is concerned.

The disruptive effect of COVID-19 is interesting from an analysis perspective, but I think I prefer the more predictable transformation pattern in payments we were witnessing prior to COVID-19’s arrival!

About the Data

The payments data is sourced from the RBA website.

For most clearing streams the data is separated into raw and seasonally adjusted data to smooth out the typical peaks and troughs evident in payments data over the longer term. I have tended to use the seasonally adjusted data. The website provides notes on definitions and the individual data sets have notes on any breaks in the data. There was a significant change to the DE format in May 2018 which accounts for the lack of material discussion about DE as there is a significant discontinuity around this time.

For the three scatterplot charts the comparison period is the average for Mar-May 2020 v the average for September 2019 to February 2020.

Other data such as CPI and population data is taken from the ABS website. Where data is presented annually or quarterly, I have interpolated it to align to the monthly data presented in the RBA stats.

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