PayPal usage soars to record high during COVID-19 pandemic

The latest Roy Morgan Digital Payments Report shows 15.7 million Australians aged 14+ (74.2%) are aware of online payment platforms such as PayPal, Visa Checkout, masterpass and Western Union.

Of the four leading online payment platforms PayPal is the clear leader with 72.5% of Australians aware of the platform. This compares to just under a quarter, 23.6%, that are aware of Visa Checkout, and just under one-in-six aware of Western Union (16.4%) or masterpass (16.3%).

The COVID-19 pandemic has provided a huge boon to online retailers, and this has also driven the increased usage of online payment platforms such as PayPal. Now 47.3% of Australians have used PayPal in the last 12 months, up nearly 10% points from 37.8% in February 2020 just before the pandemic hit Australia – reversing the trend.

Usage of PayPal had been at 40.5% of Australians in January 2018 and gradually increasing before peaking at 42% in June 2018. From mid-2018 usage of PayPal had begun to gently decline as newer forms of payment such as buy-now-pay-later services gained an increasing share of the digital payment market.

Over three-quarters of Australians, 16.5 million (78.1%), are now aware of buy-now-pay-later services such as Afterpay, Zip, Latitude Pay and Humm. However, usage of these services is far lower with only 3.5 million Australians (16.6%) using a buy-now-pay-later service in the last 12 months.

To learn more about how Australians are using ‘buy-now-pay-later’ services please see our recent release on trends in that market: ‘$39 billion purchase of Afterpay highlights value of buy-now-pay-later services such as Zip, Humm and Latitude Pay’.

These new digital payment findings are from Roy Morgan Single Source, Australia’s leading consumer survey, derived from in-depth interviews with around 50,000 Australians annually.

Online payment platform usage trends (used in last 12 months): 2018-2021

Source: Roy Morgan Single Source, 12 month moving average, Avg. sample = 50,277. Base: Australians 14+.

Roy Morgan CEO Michele Levine says the COVID-19 pandemic has had many impacts throughout the economy and one of the most prominent is the increase in online retail sales – which has had a large positive impact for online payment platform PayPal:

“The proliferation of digital payment services in recent years is profoundly changing the way Australians conduct financial transactions and pay for goods and services.

“Often referred to as ‘fintech’ – the union of finance with technology – these new services include buy-now-pay-later services led by Afterpay, contactless/cardless mobile payment services such as Apple Pay or Google Pay, wearable payment devices such as fitbit pay, banks own mobile payment services such as Commbank Tap & Pay and even cryptocurrencies like Bitcoin or Ethereum.

“However, despite the multitude of options now available for consumers PayPal stands out as the leading digital online payment platform used by 47.3% of Australians in the last 12 months. PayPal is ahead of second-placed bill payment service BPAY used by 42.7% of people largely to pay bills and both are well ahead of third-placed Afterpay used by 13% of Australians.

“The onset of the COVID-19 pandemic in March 2020 drove people to purchase goods online and led to a steep increase in people using the PayPal online payment platform which increased by nearly 10% points since February 2020. This is the largest increase during the pandemic for any of the many digital payment services now available.

“As a more established digital payment service PayPal has been facilitating the online purchase transactions of Australians for nearly twenty years. This longevity in the market leads to high penetration for PayPal amongst key demographic groups – over 55% of people aged 35-49 used PayPal in the last 12 months – higher usage than any other age group.

“The annual Roy Morgan forecasts on pre-Christmas retail spending released in conjunction with the Australian Retailers Association (ARA) last week show Australians are set to spend $58.8 billion in the pre-Christmas period this year – virtually unchanged from the record spending a year ago.

“Importantly for online digital platforms such as PayPal, a recent Roy Morgan survey showed Australians are predicting an average of 48% of their Christmas gift shopping will be done online. 

“These results show the next few months are set to break new ground with a record level of online sales and heavy utilisation of digital payment services. PayPal has been a big winner of the move to online so far during the pandemic and over the next few months we will be keeping a close eye on whether PayPal can hold onto the gains it has made over the last 18 months or whether rival digital payment services such as Afterpay can close the gap as we enter ‘COVID-normal’.”