Top

COVID-19 as a Catalyst in the Deeper Acceptance of Digital Payment Platforms

Looking at the impact of COVID-19 on digital payment platforms, its acceptance in the near term will be improved leading to a stronger role in the longer term.

COVID-19 has damaged both, demand and supply. With lockdown across various parts of the world, many manufacturing and production units are shutting down. It led to a steep fall in the supply of intermediary as well as final goods. The COVID-19 crisis does not seem to be a short-stay guest, it will result in the exit of many small to medium scale businesses from the market. On the demand side, people are facing a threat to their livelihood, pushing the economy generations back.

Cash as a medium of exchange losing its dominance

During the COVID-19 crisis, cash is seen as a potential carrier of the virus; governments and regulatory bodies are discouraging its use. The urgent need for essential goods is forcing people to switch to digital payments sooner than perhaps they would otherwise have done. For those for whom cash is their only means of payment are finding it harder to make purchases.

Furthermore, with many bank branches also closed, retail stores have limited options for processing cash into their bank accounts and they do not want to be left holding large amounts of cash that may be vulnerable to theft.

Shift towards the digital payment platforms and examples

During the lockdown, the frequency as well as the total monetary value of transactions, has declined. However, with people only buying necessary goods and more goods in one go, the value per transaction is increasing, and people are increasingly relying on digital platforms:

  • Cash use in Britain has halved in just a few days following the government’s imposition of a nationwide lockdown. Stores selling essential goods and services are trying to avoid cash transactions. For transactions of GBP30 (~$40) and under, most stores can accept contactless payment by credit or debit card, or mobile payment, for example Apple Pay.
  • In Australia, basic amenities outlets are also asking customers to use contactless technology to avoid touching EPOS machines.
  • PayCargo, Florida based online payment platform has launched a new service to help the freight and shipping community.
  • While official coronavirus cases in Russia are low, the country has still instituted a lockdown in Moscow and other major cities. Here too, there is a push for digital payments to discourage the circulation of banknotes.

Emerging regions, such as Africa, which is known to have the largest unbanked population, are implementing measures to shift a greater volume of payment transactions toward mobile money and away from cash.

  • M-Pesa, the dominant player in Kenya is waiving fees, and the daily transaction limit has been raised from Ksh70,000 (≈$660) to Ksh150,000 (≈$1400).
  • Paga, a mobile money operator based in Nigeria, with free P2P transfers, now allows for free transfers up to roughly 5000 Naira (≈$15) from customer accounts to bank accounts, to encourage more digital payments.
  • Ghana’s monetary body also eased know-your-customer (KYC) requirements on mobile-money, allowing citizens to use existing mobile phone registrations to open accounts with the major digital payment providers

People’s anxiety about obtaining enough food and medicine is offsetting long-standing concerns about the potential for fraudulent activity that may have prevented stronger uptake so far. This new spike in activity will encourage payment providers to continue investing in service quality and anti-fraud measures, though fraudsters will also see the increased use of digital platforms as a golden opportunity.

Conclusion

Until 2019, digital payment adoption was slow and varied significantly by country. Reasons included cultural, demographic and technological – many of which were a function of economies being at different stages of development. However, the uncertain longevity of the COVID-19 crisis will lead to the public being habituated to digital payment platforms, almost by force. With handset penetration improving significantly, with nearly 5.1 billion total unique mobile users and 3.7 billion unique mobile internet users at the end of 2019, it will help smooth the adoption of digital platforms for payments.

And with more competitors providing digital payment platforms, the competition should help to sharpen the service experience for users as poor performance will lead to users voting with their (digital) wallets.

Arushi Chawla is a Research Analyst with Counterpoint Technology Market Research, based out of Gurgaon (near New Delhi). Currently, she is dedicated to primary research of emerging technology like mobile phone device, consumer IoT, and other technology-associated segments. She also has a keen interest in researching the impact of mobile phone technology and the digital payment ecosystem on the economy. Arushi holds a Post Graduate Degree in Economics from Amity School of Economics and is a graduate in Economics from Delhi University.

Apple Snack Pack

PREMIUM

Understanding iPhone

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited

Registration

In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.