Abstract
This paper analyzes card payments to the retail sector in Switzerland during the COVID-19 crisis. We provide evidence on aggregate effects and regional shifts. Pronounced shifts—which persisted post-lockdown—can be observed from urban to suburban and rural areas and among cantons. Data allow us to identify directly two sources of shifts: “tourists and business travelers” and “e-commerce.” We indirectly identify additional sources: infection risk, lockdown measures, working from home, shopping tourism, and cash substitution. The COVID-19 crisis seems to have reinforced pre-existing trends that may have faster than anticipated effects on the economy. Our analysis underscores the usefulness of real-time card payment data to inform policymakers.
Highlights
This paper documents the effects of the COVID-19 crisis on card payments to the retail sector in Switzerland
We focus on the retail sector, as card transactions in other sectors essentially came to a halt during the COVID-19-related lockdown period from mid-March to the end of April 2020
All but the retail sector almost ceased to exist during the lockdown period, with total card payments in non-retail sectors falling to levels as low as 10% in a year-on-year comparison
Summary
This paper documents the effects of the COVID-19 crisis on card payments to the retail sector in Switzerland. Excess retail payments behaved normally in January and February, being slightly above zero and reflecting growth in card usage and consumption This trend reversed several weeks before the lockdown became effective, at around the time when the first COVID-19 infection was confirmed in Switzerland. While excess retail card-not-present payments decreased in the post-lockdown period, a positive contribution to shifts across differently urbanized areas remains and strengthens across cantons. To the declining use of cash, we believe four additional sources to be relevant for payment shifts: infection fear, differences in retail-sector lockdown exposure, differences in the feasibility of working from home, and differences in shopping tourism exposure. The stronger the retail sector is affected by the lockdown, the lower are the excess domestic card-present retail payments (blue) This correlation remains stable when looking at cantons with low infection rates only (red). The negative correlation remains stable when adjusting for cantons with high infection rates (red).
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