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.


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.

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