How Did the COVID-19 Pandemic Influence the Digital Payments Industry?
The COVID-19 pandemic has disrupted all industries and markets. While people stayed at home due to government lockdowns, industries such as the air travel and hospitality sectors were hit hard by the coronavirus’s effects. On the other hand, as consumer behaviour is rapidly shifting from offline to online, the eCommerce industry is booming while people are increasingly turning to digital payment methods to purchase products. As a result, both the traditional and the online payments landscape has drastically changed during these uncertain times. And in this article, we will take a closer look at the digital payments industry’s changes.
Fall in Consumer Spending and Payments Revenues
According to an Accenture study, with multiple industries collapsing, global consumer spending has decreased during the pandemic. At the time the report was published, restaurant bookings in the UK decreased by nearly 100% while US tourism spending had fallen by 78%. As consumer spending decreased, researchers have also discovered a fall in consumer payments revenues.
Cash Use Decreased Amid Surging Demand for Contactless Payment Methods
To reduce the chances of getting infected, people are increasingly turning away from cash as their preferred payment method. According to a recent poll, cash usage fell between 56–68% in the United Kingdom, with British citizens going an average of 44 days without cash. In the UK alone — compared to last year’s data — ATM transaction volumes decreased by 62% at the start of government lockdowns. As an alternative to cash, there’s a significant growth in demand for contactless payments among consumers. According to Accenture, contactless cards and e-wallet solutions (like STICPAY) are the “natural successors” for citizens with access to these payment methods. A separate report confirms this, stating that global shoppers used digital payments nearly 50% more during the pandemic than before the virus, with e-wallets and contactless cards being the top digital payment methods among consumers. Furthermore, Visa’s report revealed that the number of Americans making contactless payments has increased from November 2019’s 25 million to 31 million by March 2020.
Increased Blockchain and Cryptocurrency Adoption
With contactless payments, blockchain and cryptocurrency adoption have also increased during the pandemic. And this trend can be clearly seen in digital currency prices. While cryptocurrencies were negatively affected by March’s stock market crash — unlike general market assets -, they quickly recovered from the fall, increasing their price to new highs this year. Bitcoin (BTC), for example, after surviving a drop from March 6’s $9,100 to $4,800 by March 12, quickly recovered its losses by early May while achieving an ROI of over 70% since the year’s start. Furthermore, Forbes reported a sudden surge in cryptocurrency trading activity in April, right after Americans have received their stimulus checks from the US government. According to Accenture, blockchain adoption is expected to rise as the outbreak will likely decrease trust between consumers and traditional payments providers.
Sources:
Business2Community — How COVID-19 Increases Digital Payment Adoption Globally
Accenture — 10 Ways COVID-19 is impacting payments
Forbes — Americans Are Using Their Stimulus Checks To Buy Bitcoin
PWC — Impact of the COVID-19 outbreak on digital payments
BusinessWire — Global Online Payment Methods 2020 and COVID-19’s Impact — Digital Payment Method Adoption Grows During the Pandemic — ResearchAndMarkets.com
KomoNews — Contactless payments on the rise thanks to COVID-19 concerns VISA (US) — Merchants and consumers turn to tap to pay as part of new daily routines
Finextra — Brits go weeks without using cash during Covid-19 lockdown Financial Times — Coronavirus accelerates shift away from cash
Trading View — Bitcoin US Dollar
Originally published at https://www.sticpay.com on September 21, 2020.
