The first quarter of 2020 can be told in a tale of global macro events. First climate change, and now with COVID-19, an emerging public health issue of international concern.
Currently, many people are adjusting to self-isolation and lockdown and as a consequence, won’t have access to their usual ways of paying. Many shops that remain open are switching to contactless payments to reduce the spread of the virus. This is forcing us to change many of the ways we do things — one of which being how we purchase goods and make payments.
Knowing what payment methods are available to us is the first step in this process and here’s our advice when considering alternatives:
Get comfortable with contactless
In 2019 we asked consumers what the maximum amount of cash was that they would lend to a friend. The majority answered up to $50. However, as access to banks and ATMs is so limited at the moment, it’s challenging to maintain payments in cash.
In addition, despite the WHO claiming that it had not issued an official warning against using cash, rather advising consumers to wash their hands thoroughly after handling it. The psychological perception is already there, so it’s understandable that both payer and payee are reluctant to use cash for P2P (peer-to-peer) payments.
While only an estimated 3% of cards in the U.S. are contactless, following the emergence of COVID 19, PaymentsSource reports that 38% of US consumers now see contactless as a basic need or feature of payments. Contactless payments are widely more readily adopted in the EU, but this crisis could be the tipping point for the acceptance of digital.
Deposit and withdraw easily with digital wallets
For those who are unable to reach food shops or pharmacies, the safest way to transfer money to each other is to make P2P payments using digital wallets, which have user-friendly deposit and withdrawal methods linked to a bank account. It also doesn’t rely on sharing financial details; in many cases, only the recipient’s email address is required to make a transfer.
Traditionally, digital wallets have been used by consumers in some countries such as the US mainly to buy products and services securely and efficiently from online businesses, but in others such as the UK, adoption of digital wallets as a P2P payment method have been much stronger.
Payment providers that offer people the opportunity to financially support and assist each other in a way that doesn’t compromise their financial security and well being is a great option for people at this time.
Moving to mobile
The current restrictions imposed on society could be enough to introduce mobile payments to a new generation. One of the main reasons people have shied away and avoided digital commerce previously is because of a reluctance to share their financial details online or have a digital record of their purchases, and so instead relied on traditional payment methods.
This is set to change. With traditional banks providing more online options, we’re expecting to see a surge in adoption. These services offer customers a variety of payment methods such as UPI, credit and debit cards as well as net banking. Already, in Italy, mobile transactions have soared 81% since the end of February, according to estimates by McKinsey & Co.
The current situation with COVID-19 could also mean that we see a surge in adoption for mobile wallets like Apple Pay or Google Pay. Like contactless cards they are embedded with near-field communication technology that can be used for proximity payments via radio waves, and they’re used in much the same way. Mobile wallets are known for their smooth and seamless customer experience. It’s not just a faster checkout — all devices are supported, meaning customers can check out from a desktop, laptop, tablet or smartphone.
These bring extra layers of security because they’re housed within the confines of your mobile phone, and transactions are made using authentication, monitoring and data encryption to secure your personal information.
eCash: Taking the cash consumer online
The rejection of cash and shift to digital commerce will be a challenging adjustment for cash consumers, particularly for those who are unbanked. That’s why during this period of social and economic uncertainty, providing a smooth transition from retail to online payments will be vital. The most effective way for online businesses to accept cash is by incorporating an eCash solution into an online checkout. This can be done by enabling a customer to pay for a product or service using a prepaid account that is topped up by cash, or by allowing a consumer to make a purchase using an online platform which can be completed at a physical pay point (e.g. a supermarket) with cash. This gives the buyer the option to maintain cash as their primary payment method.
Remittances remains a priority with money transfer
The travel ban means that sending money home quickly, easily, and at low cost is going to be vital to keeping some people financially solvent.
This is where effective remittances channels come into play. Combatting the specific issues caused by the crisis is vital, for example financial inclusion for those needing financial support for the first time, or new access to digital payment methods because of displacement and isolation.
Outside the U.S. in Canada and Europe, services like Skrill Money Transfer are designed to help expats and people living overseas to send money home to their families more securely, more efficiently, and at a lower cost than traditional bank transfer services which also require both sender and recipient to have a bank account.
Keeping an eye on security
These are just a handful of ways that consumers can remain agile with payments in the face of this global health crisis. However, it’s also important to remember to remain savvy in regard to security, as the threat of payment fraud has heightened during the COVID-19 outbreak. Already, people are using the situation as an opportunity to scam others by claiming to be their bank, as well as fraudsters using online marketplaces to sell goods that don’t actually exist.
For your own peace of mind, remember that banks will never ask you for your full PIN or password via email or phone, or request you move money from accounts. Before you buy anything online, do research to ensure the seller is genuine. And use a credit card if you have one, as most major credit card providers insure online purchases.
Ultimately, having awareness of what alternative payment methods are out there and which one is right for you is vital. However, it’s not just down to the consumer — for consumers that rely on cash, the short- and long-term impact of needing to rely on digital products and services is going to be significant. Digital merchants also have a responsibility to their customer to take this into strong consideration when thinking about the evolution of their checkout, especially if they want to attract new customers and retain loyal ones.