Digital-Payment Services Are Facing a Surge Amid Coronavirus
By Marko Vidrih on The Capital
The digital payment market is booming with the coronavirus pandemic, The Wall Street Journal (WSJ) writes.
According to analysts, many electronic payment providers use additional payment processing systems that were developed in the event of seasonal spikes in online purchases (such as Black Friday). According to McKinsey & Co consulting company, in Italy, the number of online transactions has increased by 81% since the end of February.
Aaron Press, director of research on international payment strategies at International Data Corp, noted that merchants have difficulty processing a huge amount of payments.
Whenever a client uses a debit or credit card to purchase goods online, these transactions are encrypted and sent to the payment operator, which transmits the information to the issuing bank of the buyer to check the availability of funds on the balance sheet. If the bank approves the transaction, the operator contacts the seller’s bank to credit the funds to his account. The whole process takes two seconds, however, unexpected bursts of transactional activity can lead to system overload.
“Our mission has never been more important,” said Sri Sivananda, CTO of PayPal, one of the largest players in the online payment market, along with Visa, Mastercard, Amazon, Alphabet and Apple. Sivananda said the company’s platform is designed to suddenly increase demand. PayPal declined to comment on the effect of coronavirus on payment volumes.
Dyna Ford, research director at consulting company Gartner, said that despite the growth in retail activity, total revenue in the electronic payment market is likely to decline this year, as the growth of online retail stores compensates for the loss of payment companies that serve airlines or hotels. According to her, the crisis may accelerate the transition to online payments.
Author: Marko Vidrih
Featured image credit: Pixabay
