Major changes to using our money

COVID-19 has affected how we view finances, writes Sophie Elsworth

FOR better or worse, we’ve experienced significant changes to the way we manage our money during the coronavirus pandemic.

While in lockdown, many of us have been forced to overhaul our finances.

Every household has been affected differently but these are the four major money changes many people have experienced recently – and a look at what may come next.

1 NO CASH

Many businesses have pushed consumers to pay with card instead of cash during COVID-19 to prevent the spread of disease that could occur by paying with notes and coins.

The Reserve Bank of Australia’s head of payments policy, Tony Richards, said as a result, “many consumers have decided they would rather use their card than cash”.

But he expects this trend won’t last forever.

“We expect that many of those who prefer to use cash will go back to using cash, but some people may find they are happy to continue using their card more often,” Mr Richards said.

The RBA’s consumer payments survey in 2019 found there were still many households using cash for almost all transactions.

The report showed about 27 per cent of transactions were done using cash – a sharp drop from 62 per cent back in 2010.

Financial adviser Scott Haywood said using cash “makes money real”.

“When you pay by card you don’t have that feeling of taking money out of your pocket and paying for something with the money that you’ve earned,” he said.

“We definitely are spending more with card because it doesn’t feel like you’ve done a hard day’s work and you’re pulling money out of your pocket.”

2 TAP AND GO

Changes to contactless “tap and go” limits were implemented last month, rising from $100 to $200.

This has been rolled out by most banks but not all, allowing customers to make more expensive transactions without the need to touch buttons on payment PIN pads.

Regulator Australian Payments Network’s chief executive officer, Andy White, said the increase of contactless limits would be reviewed next month to see if it would remain in place for the coming months.

“The change was made to diminish the likelihood of people needing to physically touch a PIN pad, so therefore it’s linked to the COVID-19 issue,” he said.

“At the moment it’s a temporary measure.”

The new payment limit also applies to customers using digital wallets via other payment devices, such as smartphones and smartwatches.

3 SHOPPING ONLINE

Australian Retailers Association chief executive officer Paul Zahra said retailers had to adapt quickly to improve their online shopping experience during lockdown.

He said this included new offerings such as click and collect options or kerbside delivery, to ensure customers could still get their goods.

“We have witnessed a big spike in online shopping during March and April,” Mr Zahra said.

“Australian Bureau of Statistics figures indicate a rise of about 15 per cent in March. We expect in the longer term the online sales habit will continue, and we may see online grow towards around 20 per cent of total retail sales quite quickly.

“COVID-19 has definitely accelerated many trends already happening in the retail industry, including the shift towards online shopping.”

The Mother’s Day weekend saw a boom in customers flocking to shops but Mr Zahra said both bricks and mortar presences and online stores would remain critical.

“They are complementary, each strengthening the other,” he said. “Customers have come to expect these new options, and we expect most retailers now will be geared towards giving their customers more choice.”

4 REPAYMENT HOLIDAYS

Many financial institutions have offered cashstrapped customers the ability to pause repayments on their loan products, including credit cards, personal loans and home loans.

Usually they last for six months, but some lenders are reviewing them sooner.

Mr Haywood said the hundreds of thousands of Australians who had been given repayment holidays should make the most of the time off from paying back debt.

“The only reason you have got it is because you have experienced hardship,” he said.

“Enjoy the holiday period but you also have to think about how you will manage the payments at the end of the holiday.”