COVID19 has wreaked havoc on the world’s economy, impacting multiple industries. One sector that has been adversely hit is the payments industry. The Coronavirus has drastically changed payment habits, as consumers shift to digital channels to reduce the risk of infection from handling cash.
The payments world had to undoubtedly changed/adjusted post-COVID19. Here are six ways COVID19 will impact payments.
1. An overriding shift toward a cashless society
At the outset of COVID19 it became apparent that paper money was a transmitter of the Corona. The WHO recommended using contactless payments to support controlling the virus. Moreover, COVID19 destabilized the use of cash by forcing many retailers to shut their doors and sell entirely through contactless channels.
For these reasons, the pandemic has shifted consumer behavior to contactless payments big time. While cash will probably continue to subside, the contactless payment revolution is well on its way.
2. A heightened need for fraud protection
COVID19 opened the flood gates to fraudsters who are leveraging the Pandemic to unleash fraud and cyber havoc on the world. Numerous new cons and creative fraud MOs have been born during the COVD19 crisis. Common COVID19 scams include imitating public health authorities or other government officials and demanding payment from the targets.
In response, retailers and financial institutions will need to upgrade their fraud prevention and detection strategies. Specifically, the shift to digital transactions will require businesses to adjust their mobile fraud policy.
3. Mobile banking will be the new payment norm
As in-branch banking become non-existent during the COVID19 period, mobile-based transactions have become the “new norm”. This new standard will continue post-COVID and will become a mainstay of modern banking.
Consumers are opening finance apps like never before – Banking on mobile are up 35-85% Thanks To Coronavirus. (Forbes, 2020)
4. Growth for secured mobile wallets
COVID19 has changed the shopping behavior of consumers. In the post COVID19 era, many consumers avoided point-of-purchase terminals and ATM withdrawals. Digital wallets that allow a payment to be made without even touching a card to a terminal or entering a PIN will grow. Expect the use of secure wallets to grow in the future. Businesses that are able to accept payments from digital wallets will thrive, while peer-to-peer contactless payments, even between different types of wallets, will become an everyday phenomenon
5. An explosion in mobile shopping and other digital checkouts
With social distancing becoming the norm, there has been an explosion in the use of mobile and digital shopping systems. Online shopping services have seen huge spikes in demand. Two major implications can be derived.
First, organizations providing a sub-par customer journey and checkout experience is now on notice. For such providers, the clock is ticking to improve their systems.
Second, as more consumers turn to online ordering for everyday purchases like groceries, food delivery, etc. consumers will demand a quick and efficient authentication process. Friction, at any level, will not be tolerated.
6. Changing customer behavior will drive digital innovation
COVID19 has already altered consumer digital behavior. As such, traditional financial institutions and merchants will be forced to fast-track their digital innovation efforts. Legacy banks and old-style payments players may wish to upgrade and improve their digital payment solutions to the marketplace.
The overall impact of COVID19 on payments may not be known for some time – perhaps years. We do not know what the global economy will look like when we return to “normal”. But clearly, the payments world will be different. COVID19 has changed much of the world forever – including payments.