Coronavirus, also known as COVID-19, has influenced our lives significantly this year. It is not only a huge topic in search interest according to Google trends, but it has a big influence on the payment sphere all around the world. Quarantine and social distancing have changed the way people shop and that couldn’t change the way they make payments. Let’s find out how COVID-19 is impacting payments and fintech generally.
5 ways COVID-19 is impacting payments
Since the beginning of the pandemic in all the shops and public spaces people were advised the preferable use of contactless payments instead of cash or traditional card payments to prevent the spread of COVID-19. That’s why no-one wants now to use coins or banknotes, which were considered as one of the possible sources of infection. In this situation “contactless” became a new buzz word. In the report of Oliver Wyman it was written that POS contactless transactions were growing by 4% of additional monthly growth rate in March 2020 and already in April 2020 the growth was +5% every week. While, before COVID-19 POS contactless transactions monthly growth rate was around 3.8%. This is one of the major ways coronavirus is impacting payments this year.
The second way COVID-19 is impacting payments connected with banks and their reaction to the first trend. Obviously there should be a change in the existing system since the number of contactless payments is growing so rapidly. People start using this option more often and they don’t want to be distracted every time when reaching limit, to enter a PIN-code at the shop or gas station. That’s why many banks, according to Accenture research, have extended the limit for contactless payments. For example, in April banks in the UK increased the limit from £30 to £45, in Belgium it was a jump from €25 to €50 per transaction and in New Zealand – from $80 to $200.
Since all shopping centers in most countries were closed during the pandemic, people started to buy more online. As shown in Statista research about switching from offline to online shopping, around 25% of respondents in Germany, the UK and the USA started to buy clothes online. Around 15% started purchasing online books and health products. This is how COVID-19 is impacting payments right now. More online shopping – more demand on different online payment solutions.
A negative consequence of how COVID-19 is impacting payments is an increase of fraud. Banks are increasing contactless payments and relaxing certain fraud-mitigating measures, and people are forced to buy more online. For many people this is a new experience (especially for middle-aged and older people). These factors together establish supportive conditions for fraud.
According to Accenture research, frequency of food delivery in the UK has increased by 60% among people aged between 18 and 34. This means that more businesses in the food industry should focus on providing better and more convenient online payment options that benefit most of their customers. There could be different payment options, suitable for different audiences. It can be traditional payment card processing or popular e-commerce payment methods like PayPal or alternative payment methods through e-wallets. 2020 established new rules in business, which require now providing different payment options to have more happy clients and, as a result, more profit.
As you can see, COVID-19 has already made a significant impact on payments worldwide. But this process has just started and obviously, in 2020 many businesses will have to change their business models and choose different payment solutions for their customers as well. Now it’s time to implement the new online payment options to your website. At Universepay you can find out, adding of which payment options on your website can result in a profit growth for your business. The whole situation with coronavirus is challenging for all the businesses and requires exploring new opportunities and being flexible with strategy. That’s why it is important to stay in the loop and implement new technologies into your business.