The impact of COVID-19 on our spending habits cannot be overemphasised. With the temporary shutting down of industries and businesses around the world, millions of people have been laid off, furloughed or are earning less. As a result, we’ve been forced to reconsider what we spend our money on. Out of financial necessity and due to government stipulations, we’re currently purchasing only the most essential of items.
But it’s not only what we buy that has shifted during this time, but also how we buy the items we need. In order to stay safe, we’re suddenly needing to rely on the technology at our disposal to complete our transactions and conduct our financial affairs. Technology that doesn’t require us to visit a bank, touch cash, or engage unnecessarily with merchants or customers. Technology that is seamless and secure, and considers both our physical and financial well-being.
Doing business in the COVID-19 era – and likely well beyond – is going to depend on payment solutions that are safe and convenient, and that cater to our constantly evolving situation and needs.
The rise and rise of contactless payments
In March this year, 31 million Americans tapped a Visa contactless card or digital wallet to make a payment. This was an increase of 6 million taps in the four short months since November 2019 and a 150% surge in contactless usage in the space of a year.
The United States is not alone in this. Digital payment options in sub-Saharan Africa have been on the rise for some time as markets leapfrog over older technologies in pursuit of advanced, mobile-focused solutions. In the time of COVID-19, this need has become even more critical as merchants and customers look for payment methods that allow them to socially distance.
When lockdowns first started to take effect around the world, grocery stores and pharmacies were often the only businesses that were allowed to remain open. Shops such as these, which already saw high contactless usage, watched this usage rise even higher. Limiting the interaction between cashiers and customers became a priority, as did reducing the need to touch point-of-sale devices.
In response to this massive surge in demand from consumers, merchants and governments, global payment provider Visa has increased the limit above which a verification method, such as a PIN, is required. This means that consumers can now make larger payments without having to touch the terminal. Some 25 countries across Central Europe, the Middle East and Africa are considering or have already started making use of this increased limit.
How businesses are adapting
The easing of lockdowns has allowed a greater number of businesses to operate, but many have to work remotely or, where products are sold, on a delivery-only basis. This has inevitably favoured businesses that already have online purchasing options in place, and whose e-commerce processes are easy and efficient. In a market like sub-Saharan Africa, which is driven by mobile technology, mobile-friendly solutions are also coming out tops.
Businesses that don’t cater for digital payments are being forced to upgrade their processes fast or risk falling behind. Those who make use of this opportunity to integrate frictionless digital payment solutions such as those provided by Visa are likely to succeed despite the complex economic climate. Those that use this time to innovate by adopting cloud-based infrastructure, automating processes and actively analysing data, even more so.
We’re a long way from knowing how the economic impact of COVID-19 is going to play out in the long term. But even at this early stage, it’s clear that its contactless payments and streamlined e-commerce solutions are only going to become increasingly important for customers and businesses alike. We need payment options that allow businesses and industries to regain their foothold in local and global economic markets so that individuals can win back their financial independence in turn. And we need to do this while considering the limitations on physical contact and movement that are likely to be the status quo for some time. Safe, convenient and advanced digital payment solutions are the answer.
Jabu Basopo is the Visa’s general manager for Southern and East Africa. Visa is a global payments technology company that works with consumers, businesses, banks and governments in more than 200 countries and territories worldwide