An industry whose closest familiarity with viruses has come from the kind that infects computers has for most of this year had to contend with a pathogen that has sickened millions of people and killed hundreds of thousands. While the payments business is hardly alone in the sweeping adjustments it has had to make to contain the impact of the novel coronavirus, it is finding that a number of trends that were emerging pre-pandemic are now moving forward much more rapidly.
Indeed, some might now have such momentum as to be considered permanent.
Cash To be Cashiered?
It seemed like cash, the epitome of up-close-and-personal payments, had become the Payments Public Enemy No. 1 as the Covid-19 pandemic raged this spring. Some news reports vilified cash as a medium that fast-tracked the highly infectious disease. A number toll-road and bridge authorities stopped accepting cash, and many merchants encouraged payment with anything but cash.
Credit-union service organization PSCU reported that, as of the week ending May 31, ATM cash withdrawals were down 30% or more year-over-year for ten straight weeks.
But the U.S. Department of Homeland Security declared workers who service ATMs to be part of an “essential critical infrastructure workforce.” The Bank of Canada urged retailers to keep accepting cash to ensure consumers could buy needed products and services. “The risks posed from handling Canadian bank notes are no greater than those posed by touching other common surfaces such as doorknobs, kitchen counters, and handrails,” the central bank said in a news release.
The Sudden Mainstreaming of Contactless
For years, the U.S. payments industry has talked about contactless payments. After this year, it may start talking about touch-free payments. Fearing infection, consumers have made it plain they don’t want to touch anything at the point of sale, not keypads, not pens, not even a proffered stylus to peck out a PIN.
But that contact phobia is also reshaping some traditional arrangements in payments.
For example, restaurant patrons are demanding apps that let them scan a code to call up a menu, place an order, and pay for the meal—all while they’re sitting at the table. In cases like this, the traditional card-present world is dissolving into the card-not-present space, says Ellen Linardi, head of product at Clover, a unit of Fiserv Inc. that makes point-of-sale payments technology (for more on POS trends, see Components, this issue).
The Explosion of E-Commerce
Store shelves started emptying early this spring as multiple states adopted shelter-in-place rules, so consumers turned increasingly to online shopping to buy groceries, replenish household goods, equip their newly-created home offices, and get toys, games, and books to keep their children occupied.
The result? The Covid-19 pandemic has pushed e-commerce to the forefront for many.
The Immediacy of Immediate Payments
History may record that 2020, the year of Covid-19, was the year that real-time payments proved their utility in the United States. From stimulus payments to peer-to-peer transfers, the need to get money into the hands of people with immediate needs was seldom more acute.
The Resilience of the Fraud Virus
Being a payments fraudster may be a pandemic- and recession-proof occupation. In good times, when all parts of the economy are open and consumer shopping is unimpeded, fraud activity is up. Now, as the Covid-19 pandemic proved, fraud activity is still rampant, just often in different ways.
IoT Payments: Down, But Not for the Count
Locked-down Americans drastically reduced their driving in the spring, which naturally reduced demand for gasoline. Not quite so intuitively, reduced driving is also shaving Internet of Things payment volumes, according to David Nelyubin, a research analyst who monitors the IoT at Marlborough, Mass.-based Mercator Advisory Group Inc.
That’s because many consumers hoping to get lower auto-insurance premiums now have so-called telematics devices in their cars that feed all sorts of driving information to their insurers—and generate automatic IoT-based premium payments (“Wellsprings of IoT Payments,” May). But fewer miles traveled translates into fewer dollars paid in premiums, according to Nelyubin.