That the shift toward digital forms of payment was accelerated by the pandemic has been duly noted over the past year, but how much of that change will stick once the U.S. market and the rest of the world gets beyond Covid? Not all of it by any means, but a significant portion, Mastercard Inc. says in a report released Tuesday.
Consumers en masse were pushed to online shopping even for staples like groceries and restaurant meals, for example, and while some of this surge has receded as vaccination rates increase and lockdowns become less common, part of it is permanent, Mastercard says. Grocery stores pre-Covid saw 7% of their sales online, but that number jumped to 10% at the peak of the crisis and will settle at 9%, according to the forecast contained in the latest “Recovery Insights Report” from the Mastercard Economics Institute. The institute based its conclusions on data from Mastercard’s global network.
While the grocery sector will see the most “digital longevity,” according to the report, other sectors similarly will wind up with a permanently higher proportion of digital payments. Restaurants, many of which were forced to adopt mobile payments for the first time to cope with online orders, saw e-commerce sales surge from 18% of volume to 33% at the peak, a number that will settle at 23%, the report estimates.
Overall, Mastercard estimates between 20% and 30% of the shift to digital forms of payment across all retail sectors will be permanent. Indeed, the pandemic accounted for $900 billion more in e-commerce spending worldwide than would otherwise have taken place last year, the report estimates. That drove the e-commerce share from $1 out of every $7 spent to $1 out of every $5.
“While consumers were stuck at home, their dollars traveled far and wide thanks to e-commerce,” said Bricklin Dwyer, Mastercard’s chief economist and head of the Mastercard Economics Institute, in a statement. “This has significant implications, with the countries and companies that have prioritized digital continuing to reap the benefits.”
At the same time, the trend toward electronic payments and away from cash for in-store transactions accelerated by an estimated one year in the United States, the report estimates. “According to our analysis of payment forms at brick-and-mortar retail stores and restaurants, we saw non-cash payments jump by an additional 2.5 percentage points beyond the ongoing trend,” Mastercard says in its Tuesday release.