Covid-19 has disrupted the economy in a real bad way. One thing is crystal clear: the economic and human impact is significant due to this virus. The way people shop has drastically changed. People have become more cautious to shop at public places. Also since many people are working from home, they are comfortable being at home and prefer things to come to their doorstep than them stepping out. At the same time, even the way they prefer to make the payment has changed. It is going to be a challenging situation if there is a sudden spike in payment processing both for payment processors and merchants.
Desire To Be More Cashless:
People are really cautious about using cash and coins during the current situation. That’s because the virus can survive on cash and coins. It can survive on metal surfaces such as doorknob, counters etc.
There is a significant increase in contactless payments by customers. Digital wallets and contactless payments have become a trend. Also, contactless and digital payments are more secure and require less interaction. Studies have shown that credit or debit cards can have more germs than cash and coins. Some experts believe that it is better to keep cash and coin because the banks are taking precautionary measures to sanitize them.
Will Economy Grow And What is the Impact on the Payment Industry:
More and more customers are shopping online these days and they shop even in new categories like grocery and household goods. Before the pandemic hit people would prefer going to a supermarket or a local grocery store to purchase groceries because it was more convenient then.
Online retailers are going to see a long-term boost due to the lifestyle changes of the customers. With every new opportunity comes in new risks.
Supply chain management: One issue online retailers face due to the lockdown is supply chain disruptions.
Fraud risks: Retailers and financial institutions must be prepared to tackle several new types of fraudulent activities. There might be websites selling masks and hand sanitizers just to rob credit card information of the customers.
Can We Expect Any Changes In Transaction Volume:
There is a significant surge in online payment transaction volume because people are confined to their homes. However, this cannot be a total conclusion because there is absolutely no business in the travel industry including hotels and airlines. Also, there is an impact on cross border e-commerce payments business.
What Changes Does It Bring To Fintech:
Almost all the industries have seen a major hit due to Covid-19 the same is with Fintech. Here are a few changes we can see in the near future.
Mastercard and Visa have cut their revenue predictions due to the pandemic.
Many airlines are forced to cancel their flight due to the restrictions.
Robo-adviser Fintech start-ups are likely to get a hit.
Many companies are advising contactless payments.