The COVID-19 pandemic has upended virtually every single industry and government alike, creating new challenges for how we go about our daily lives. As a result, trends have emerged from this new reality including how merchants serve their customers in a safe and reliable way, among them a rising reliance on electronic payment methods.
Almost overnight, electronic payments became the preferred method of payment among small businesses and their customers. This is largely due to the hygienic benefits that contactless methods offer, as cash requires close contact and exchanging of property, both of which increase transmittance of the virus and should be avoided if possible.
Twenty-seven percent of small businesses in the United States said they’ve experienced an increase in online payments, such as Apple Pay, since the pandemic began. And PayPal, a worldwide online payments system that supports online money transfers, reported experiencing the largest single day of transactions in history on May 1, 2020. Since April, the company has added 7.4 million new accounts and attributes this spark to its newly appointed fastest-growing age group: people in the range of 50 and over.
There is no question that COVID-19 is reshaping our payments system. The U.S. government recently agreed to send stimulus checks through Venmo and Zelle, and some are suggesting the pandemic will result in an acceleration of widespread online commerce by two or three years. While this spike may be attributable to the virus, its positive effects are undeniable. In fact, 23 percent of consumers who shifted their routines online say they plan to maintain them post-pandemic. So even as the pandemic eventually fades and society returns to normal, the increased use of cashless payments is likely here to stay.
Visa has attested to experiencing a global spike in contactless payments, with two thirds of face-to-face transactions occurring with a tap. Mastercard also reported a 40 percent jump in contactless payments, including tap methods and mobile pay, in the first quarter of 2020. Although small businesses initially began the transition to contactless payments in an effort to adhere to social distancing guidelines, they have since witnessed the additional benefits the technology provides. Contactless payments methods not only allow both the customer and cashier clerk to avoid hand-to-hand contact, but contactless methods also allow for less wait time, and fewer lines.
Now is the time for businesses to fully embrace the use of online payment systems and to invest in making them more efficient and safer for the consumers it serves. After the Cybersecurity and Infrastructure Security Agency released an advisory on scams related to economic stimulus payments, it’s clear we need to focus our efforts on increasing security and technology support of electronic payments.
Fortunately, the payments industry has for years invested in updated security technology such as EMV chip technology, contactless cards, and biometric authorization to support this widespread transition. Card networks have also taken security measures a step further by implementing fintech technology, which significantly streamlines the online payment process and offers enhanced security measures. Visa, for example, last year launched its FinTech Fast Track program in the United States, which allows users to send real-time payments to friends and family, among other benefits.
In October, major global card networks joined together to launch the Secure Remote Commerce Standard to power a “buy button” on retailer websites – a feature meant to be the online equivalent of the single payment terminal at a physical store. This new technology will not only save merchants time and money but will also free up space at checkout pages. In a time of social distancing, this couldn’t be more useful.
The new trends brought upon by COVID-19 will undoubtedly have a lasting impact on the ways in which consumers conduct their lives. Customers will re-emerge to find many of their favorite small businesses that could once get away with cash-only services, have newly adapted and now welcome contactless payment methods with open arms.
Jeff Tassey is chairman of the Board of the Electronic Payments Coalition.
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