Among all the industries that were rocked by Covid-19, the payment industry could be said to be one of the most disturbing.
Changes worth half a decade are brought about in the past half-year in the payment industry. This has been a dramatic year compared to previous years in every possible way.
In the first six months, global income for payment systems decreases by an estimated 22% compared to the same period in 2019.
According to BCG, from 2019 to 2024, global payment income will likely increase by around 1% to 4.%, depending on speed Recovery from a pandemic. However, even in the best-case scenario where a quick rebound, the expected growth rate will be half the rate of 5 years before.
However, in the past six months, e-commerce, digital payments, and other online services have excellent registered growth.
Pandemics have reshaped how consumers and businesses interact with each other and this will form the future of the payment industry.
Here are some of the trends observed so far.
Cash conversion to non-cash
Even countries that have traditionally have loyal cash have experienced a decrease in cash for transactions and have seen a digital payment increase.
For example, Britain has seen a decrease in 50% cash in March 2020. Payments made directly every day because people are encouraged to stop handling cash to curb virus transmissions.
In fact, most businesses encourage payments without contact, with some as far as they don’t accept it at all.
PEER-TO-PEER PEER-TO-PEER payments and consumers-to-business have experienced growth during this time. Debit cards, usually associated with lower value transactions, also show growth.
On the other hand, ATM transactions and cash use have decreased during the same period – in India, the use of ATMs fell to almost 50% and a sharp decline was observed in the UK as well.
It is estimated that the transactions carried out through cash will decrease by 4 to 5% during this year, which is around 4 to 5 times the annual decline experienced over the past few years.
Boost for e-commerce
Pandemic forces a significant percent population to switch to digital channels for their retail purchase activities.
Industries that depend on trips such as hospitality and tourism and those who depend on density such as entertainment tend to be an unfortunate victim in the short term, based on how the crisis has developed.
However, niche segments such as fresh food, pet supplies, home entertainment, and so on are expected to grow at a better level.
In the retail sector, the buyer’s behavior shift is observed with customers who move from brick-and-mortar to retail shopping online. This was evident from the second quarter of Amazon which recorded 40% Y-O-Y which was enhanced by the growth of food sales.
This consumption shift can also cause a shift in the payment method used. For example, in place using a credit/debit card, consumers can switch to payment mode without contacts such as digital wallet or cryptocurrency.
Move from “Physical” to “Virtual Banking”
Banks in various parts of the world close branches for a while or permanently because of the current scenario. This has been assisted by technological adoption for real-time payment facilities.
In the words, Deepak Sharma, Chief Digital Officer in the Banks box, India – “ninety-five percent of transactions moved from the post-covid branch. Unless there is a great need for customers to visit branches, we do not see it (again in the near future). “
“We have also seen a quick adoption of WhatsApp banking and bots banking conversations. Soon, we will see (this change is clear) while conducting small business transactions and the origin of the loan too. Even after we exit Covid, our habit changes (have seen) will continue, “he added.
Cross-border payment flows severely affected
Because of the locking introduced by the government, international travel to the termination of milling which caused a massive decrease in international transactions.
It gets worse by relief offered on transactions to increase demand.
Trade between regions has a deeper impact than intra-regional that hurt cross-border payments, while at the same time commodity prices such as oil fell because demand decreases.
It has a 2-fold effect on the transaction value due to volume and unit prices down.
To conclude, the crisis often makes opportunities for companies to see well how they do business. Covid-19 is no different except for speed that has successfully influenced changes.
The payment system has been forced to accelerate and meet the challenges raised against them.
The most talented company adapts to the situation, jumps ahead of the competition, and provides extraordinary value to customers to survive and form the industry.
Conclusion
In this blog you learn about Digital disruptions that will shape the global payments industry.
If you find this blog post informative then share this with others also.
Coteriesoft – Best IT company in Lucknow. If you want any type of IT solution then you can connect us at any time.
