If there’s anything we can all agree on in 2020, it’s that this has been a life-changing year. From work to entertainment to the holidays, COVID-19 has turned it all upside-down.
The silver lining is that 2020 has also reminded us all how much we need to appreciate and look out for our families, friends, and fellow community members. The way that various towns and neighborhoods have rallied around those in need to keep small businesses afloat and create a safer world for all has been nothing short of inspiring. In the midst of it all, the payment processing industry has been quietly paying a part in this survival as well, in more ways than most people notice.
How 2020 Has Changed Our Lives
In many parts of the world, seemingly overnight, COVID-19 went from an isolated problem that only travelers feared to a public health crisis endangering everyone. The ultimate change we’ve all made: limiting our in-person and hand-to-hand interactions. We’ve stayed indoors, worked from home, and turned to online shopping and pick-up options in our buying habits.
How 2020 Has Changed Our Money
The financial sector has gone through dramatic changes to accommodate this sudden shift away from hand-to-hand payment processing and toward contactless, digital options. While this transition was already happening with the uptick in contactless transactions like Apple Pay and Google Wallet, the global pandemic threw this shift into overdrive.
At the same time, we have seen a far greater need for payment security as well. There has been a rise of scams directly related to the pandemic, like those selling fake cures or preventative measures for COVID-19 or phishing scams that look like emails or texts from healthcare authorities. More scammers are also taking advantage of age-old schemes like false mortgage refinancing and bogus health insurance sales. Many consumers are more on guard about their money today than ever before.
How 2020 Has Affected Brands, Companies, and Small Businesses
The economic strain of COVID-19 has been felt by businesses around the world, primarily small and mid-size companies. While some businesses are still performing well, namely pharma, cloud computing, ecommerce, and gaming according to FT, other industries are in serious trouble. Some businesses like gyms and salons have been forced to close entirely for months at a time, sometimes several times over the past year.
For those that could stay open, many are facing critical safety precautions that lower their revenue. Even without those precautions, many consumers in their customer base are out of work so they have seen a drop in business.
Because so many people are out of work or feel that their job is insecure, consumers are spending less as well. For any product they buy, they’re often choosing the cheapest option which is typically from a large-scale corporation. That means small businesses are getting an even smaller piece of the pie than before.
Along the way, brands and companies have also felt the need for greater digitization to keep up with the contactless demands on the pandemic. Consumers are doing more shopping online, and when they do shop in-store, many are opting for contactless payment options. If a business doesn’t offer those accommodations, some consumers may be more willing to go somewhere else that does.
How Payment Companies are Becoming Community Allies
With the struggles that so many brands and companies are enduring around the globe, everyone who can has been trying to do their part to keep our economy healthy. Payment providers, in particular, have taken several steps to ease the pain of the pandemic.
Providing Local and Alternative Payment Options
While digital transactions are more COVID-19-safe, not everyone wants to support the large payment providers that have cornered the market until recently. The push for more digital options and the push for supporting smaller businesses in their time of need has led some payment providers to offer more options.
For instance, Macropay’s payments platform supports local forms of payment so consumers and businesses can support their local economies. There are also options for consumers who prefer cash, such as transaction-specific barcodes they receive when they shop online so they can go to a nearby convenience store and present the barcode to pay for that online transaction in cash.
Offering Subscription Processing Options
For businesses to survive, they don’t just need more revenue, they need a stable reliable flow of future revenue. The subscription model gives them this comfort and predictability. In fact, more than 22% of companies have seen increases in subscriber acquisition rates during the pandemic, especially those offering food and beverage subscription boxes.
Assisting with Government Loans and Stimulus Packages
Numerous governments and organizations around the world have put forth financial assistance as a stopgap to mitigate the worldwide economic crisis. However, this involves processing and dispersing massive volumes of funds, which these organizations don’t have the infrastructure to complete. This is where banks and payment providers have stepped in. Already having the systems in place to handle large numbers of transactions, they have processed billions of dollars in much-needed loans, stimulus payments, and other funds.
Processing High Volumes of Transactions
Between a rise in ecommerce and in contactless transactions, far more transactions have been taking place online today. The large companies that were primarily responsible for those payments in the past have struggled to keep up with that jump. As a result, smaller payment providers have stepped up.
Traditional banking institutions in Europe, for example, have struggled to cope with the increase in electronic transaction volumes this year. Smaller payment providers have stepped in to offer a hand. For example, Ayden, which processes payments for companies such as Microsoft and eBay, has seen a dramatic surge in transactions, skyrocketing them to a market capitalization of USD 19 billion.
Assisting with Customer Experience Digitization
While the rise in digitization has been a struggle for some, it’s also a transition that allows companies many benefits in the long run. For example, businesses are recognizing the power of integrating their payment systems with their marketing data, which allows them to retarget customers with personalized product recommendations and notifications. Payment providers around the world are pushing innovation to make these types of benefits more profitable and user-friendly for those companies.
Big Changes are Here to Stay
The simple truth is that life will probably never fully return to the way it was in 2019, as predicted by the experts at McKinsey and others. The COVID-19 pandemic has had a profound impact on our global economy and every element within it, from consumers to small businesses to major corporations. The payment industry, for one, is dedicated to shifting and adapting to whatever the future may hold for the benefit of businesses and consumers alike.
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