The world’s entire financial ecosystem is experiencing seismic turmoil as banks and financial institutions globally deal with the impact of COVID-19.
The world economy largely relies on human movement, and money movement. As the COVID-19 crisis infiltrates almost every industry on the planet with lockdowns, restrictions and cancellations, new paradigms in the payments space are emerging. While we wait out this current crisis and observe the key changes in consumer & corporate behavior, we are all looking to the future.
COVID-19 has created volatile environments around the world, but while there is instability and uncertainty, people are adapting.
As a result of this unprecedented catastrophe, retailers and merchant will be closely re-examining their business strategies.
How COVID-19 is affecting both consumer and retailer behavior
Since the beginning of this crisis, almost 90% of consumers worldwide reported that their buying behavior has changed.
- Online purchasing is replacing in-store visits.
- Stock-up behavior is affecting both retailers and consumers, with bulk purchasing, leaving many stores without stocks of necessary products and prompting retailers to implement quantity limits.
- Due to widespread public closures, luxuries such as dining out have decreased, and the purchase of physical goods such as food and other essentials has increased.
- The travel industry is feeling the effects, with a drastic drop in tourism spending. This could negatively affect global payment systems that rely on foreign travel for growth.
The rise in digital payments as a direct result of the pandemic is clear. In Italy alone, e-commerce transactions have risen 81% since the end of February.
As it continues, France, the UK, New York and California are also experiencing the sharp increase in e-payments, and retailers and merchants are dealing with the challenges associated with the sheer volume of payment-processing needs.
Since the outbreak, both consumers and producers have begun to focus even more heavily on the potential of technology. Many retailers have been pushed to focus on expanding automated delivery and unstaffed services. Even when the crisis passes, these technologies will continue to develop and advance.
Now more than ever, digital payments have become a basic utility, as necessary as water and electricity for many consumers.
With movements restricted, physical interactions limited and the ability to pay with cash on the decline, payment providers must step up their game to ensure that digital payment methods are always available.
Real-time visibility – the ability to see transaction volumes, decline levels, errors and traffic as they happen - is critical. Pinpointing and resolving issues is crucial, and transaction monitoring enables proactive rather than reactive management, pre-empting problems before they impact customers.
The importance of analytics
With the acceleration of new and emerging payment methods, payment environments are becoming more complex by the day.
Even once the crisis passes, things will not return to how they were before. Consumers will think differently about how they interact with retailers and their purchasing behaviors will be forever changed. Retailers will have to accommodate even more payment methods and allow for an increase in multi-channel interactions. The customer experience will play an even bigger role in establishing loyalty.
Data will be key to success in navigating an even more rapidly evolving payment space. The ability to glean insights from masses of information to tell a story and guide decision making will be more vital than ever.
Those organizations who equip staff with the tools and skills to gather, categorize and translate data into intelligence will be better positioned to respond quickly to change and make more informed choices as we all navigate this unknown landscape.