Chapter 4: One Year of Payments and the Pandemic
This is an installment of Making Change, an ongoing series of reports based on Square data (March 2021).
It has been one year since the onset of COVID-19 dramatically changed the shape of our daily lives. Business owners were forced to persevere against the odds, many opting to pivot their operating models entirely, while consumers were asked to stay home. In between shelter-in-place mandates, reopenings, and more shelter-in-place mandates, the nature of global commerce shifted more in this past year than ever before. The steady increase in cashless adoption rates during the course of the pandemic is emblematic of a renewed preference for digitization among business owners and consumers. In the United States specifically, we estimate the shift away from cash usage in this past year would have taken nearly three years without the pandemic. It’s not to say we’re ditching cash entirely any time soon, but the contactless payments, online ordering, and touch-free pickup and delivery we’ve come to rely on during this past year are telling signs of the forms of commerce that are here to stay on a global scale once COVID-19 is far behind us.
Share of Cashless* Businesses Globally
We analyzed Square payments data to assess the share of cashless businesses across each of our international markets, as COVID-19 spread across the globe. From February 2020 to the end of February 2021, we’ve seen the share of cashless businesses more than double in the U.S., Australia, Canada, and the UK, and nearly double in Japan. In countries like Australia, where COVID-19 cases have been lower since October 2020, the increased and stabilized share of cashless businesses hints at a trend we might come to see in the “new normal” post-pandemic world in other countries.
*For the purposes of this report, cashless businesses are defined as those that are accepting 95% or more of payments via cashless methods (in-person debit, credit, or contactless payments; Square Online payments; or card-not-present payments).
Percentage of Cashless Businesses
Global Cash Usage over Time
Since the onset of COVID-19, consumers from Japan to Canada have become less reliant on cash. Despite cultural nuances that largely dictate each market’s reliance on cash payments, the data proves that the pandemic has already made a lasting impact on consumer behavior globally.
Share of Cash Transactions over Time
U.S. Cash Usage Since 2015
When we look at U.S. businesses that have been with Square since 2015, we see a similar story, with a slightly more substantial dip in cash usage during 2020. In other words, we estimate the shift away from cash usage this past year in the U.S. would have taken nearly three years without the pandemic.
Percentage of Cash Transactions
Share of U.S. Cashless Businesses by Industry
Business owners across different industries have been uniquely affected by the pandemic. Here, we compare the share of cashless businesses in the U.S. by industry to see how salons, restaurants, fitness studios, and more have adapted differently over the past year.
Share of Cashless Businesses
Share of U.S. Cashless Businesses by State
With city and state-level shelter-in-place mandates in mind, we analyzed the share of cashless businesses by states and territories across the U.S. to determine which exhibited the largest and smallest shifts towards cashless operating models.
In Vermont, for example, your chances of walking into a business that is cashless are 8.2 times higher than pre-pandemic, with 20% of businesses now operating as cashless, up from only 2.5%.
States with Largest and Smallest Shift to Cashless Businesses
Growth of Online and Contactless Payments Continues
From February 2020 through February 2021, business owners and consumers have become increasingly reliant upon contactless and online payment options amidst shelter-in-place mandates and COVID-19 concerns. Much of the shift towards online payments happened quickly:
of businesses that started taking online payments this past year began doing so during the first two months of the pandemic.
From February 2020 through February 2021, we saw a 15.1 percentage point increase in the share of U.S. Square sellers accepting online payments. This compares with a 3.3 percentage point increase the previous year, pre-pandemic.
of U.S. Square sellers were accepting online payments by the end of February 2021, up from 30% a year ago.
Share of U.S. Businesses That Accept Online Payments
From February 2020 through February 2021, we saw a 10.2 percentage point increase in the share of U.S. Square sellers accepting contactless payments.
of U.S. Square sellers were accepting contactless payments by the end of February 2021, up from 64% a year ago.
*Defined as payments made in person with a contactless reader using a credit/debit card or mobile device.
U.S. Consumers and Business Owners Weigh In
We commissioned third-party data from Wakefield Research, surveying 1,000 business owners and 1,000 consumers to check in after a year of the pandemic and gauge whether they think COVID-19 has propelled America closer to a cashless future. 73% of consumers and 68% of business owners say the U.S. will never become a completely cashless society.
However, among business owners who do think the U.S. will become cashless, 22% predict it will happen in 10 years or fewer, up from 13% in 2019.
of consumers think that cashless businesses are less inclusive than businesses that accept cash.
of business owners think cashless businesses are making a strategic decision to stay competitive.
of consumers are likely to walk away from a business where they are unable to use their preferred method of payment.
As the arrival of widespread vaccinations signals a possible end to the pandemic and the world starts to open back up again, we’ll continue analyzing our data to keep tabs on the ever-changing state of commerce and payments. In the meantime, check out our other data reports here.Read our methodology >
For most of this analysis, we rely on a subset of businesses that have been able to stay mostly active for the duration of the pandemic to diminish the impact that a changing cohort of businesses would have on the reported metrics. To be considered active, a business must have continued to transact with at least 12 payments of any kind on a rolling 28-day basis every day since March 1, 2020. This still allows for short-term periods of inactivity, which are more common among businesses both now and before the pandemic. Additionally, only sellers that had a record of logging both cash and card transactions with their Square product prior to the pandemic were included. The resulting data set includes hundreds of millions of transactions among more than 60,000 sellers.