The COVID-19 pandemic is changing and will continue to change many aspects of consumer behavior, as well as how businesses of all sizes operate. Just look at what is happening in the payments arena.
Cash is no longer king, checks are checking out, and digital payments reign.
Usage rates for cash and checks were slowly declining until the pandemic began in the U.S. in March. However, the decline has steepened over the past two to three months as increasing numbers of consumers remained at home, paying bills and making purchases online rather than in person. An advisory issued by the World Health Organization, advising consumers to stay away from cash for hygienic reasons, only fueled the fire.
Results of recently released studies to assess the impact of COVID-19 on payment trends indicate a sharp drop in check and cash payments and significant growth in the popularity of digital payment options. For example, a May 2020 study by FIS-The Financial Brand found that 12 percent of GenZ-ers, along with 24 percent of young millennials, 22 percent of older millennials, 15 percent of GenX-ers, and 14 percent of Baby Boomers, plan to decrease their use of checks and cash for the short term, replacing them with options like mobile payment methods and online transactions. Nineteen percent of GenZ-ers, 16 percent of young millennials, 21 percent of older millennials, 16 percent of GenX-ers, and 12 percent of Baby Boomers said they would do the same for the long term.
Contactless cards are catching on like wildfire.
A study by Mastercard revealed that consumers are “increasingly moving toward contactless card adoption due to the pandemic.” According to the global study, 79 percent of consumers are using contactless payments, citing safety and cleanliness as key drivers. Additionally, the study showed, 46 percent of consumers have replaced their “top-of-wallet” (i.e., most frequently used) card with one that offers contactless payment. That figure rises to 52 percent for consumers under age 35.
Businesses become more bullish on new solutions for faster payment collection.
Businesses, especially those whose operations were (and potentially still are) adversely impacted by COVID-19-induced closures and slowdowns are looking harder for ways to maximize their potential to collect payments, according to a report from consulting firm Accenture. Such solutions include those that allow for e-billing.
Banking goes digital
Research by FIS also indicates a marked move away from traditional banking methods, such as in-person visits. More than 45% of respondents to a survey by FIS said they have permanently changed how they interact with their bank since COVID-19 made its appearance in the U.S. Nearly one-third of participants in the survey said they would use online or mobile banking more in the future than they did before the pandemic. Almost half of the survey respondents (45 percent) reported having used a bank’s mobile wallet platform during the crisis.
The impact of COVID-19 on the payments landscape will doubtless be felt for a long time. Click here to find out how E-Complish can help businesses adapt to changing payment trends, and to schedule a consultation.