The COVID-19 outbreak has accelerated the shift towards the increased use of all-digital platforms and services by consumers across the globe. Ajay Bhalla, president of Cyber and Intelligence for Mastercard, says that the “new normal” is not a new development anymore and that we need to start accepting it as the “next normal.”
Available data and several reports confirm that the rate of digital adoption has increased dramatically due to the pandemic. More people are conducting transactions online than ever before. Consumers are also making contactless payments instead of using cash or physical cards for in-store on in-person purchases.
During the first quarter of this year, Mastercard reported a 40% increase in the number of contactless payments, internationally. This same rate or level of growth continued during the month of June 2020. Mastercard’s management says that these changes in consumer behavior and how they prefer to make payments is most likely permanent.
Juniper Research recently revealed that contactless payments are now on track to reach $6 trillion by 2024, which represents an increase of 300% in just 5 years.
The majority of customers responding to a survey or over 80% of them said that contactless payments are a cleaner or more hygienic way to settle transactions. Around 74% of survey respondents said that they plan to continue using contactless payment methods even after the pandemic has passed.
A new report has revealed that over two-thirds or 68% of Indian consumers are currently using digital or mobile banking platforms to settle transactions. The report also claims that we might be seeing permanent changes in consumer behavior. Many more people in India (and globally) are now comfortable using their smartphones to perform transactions, which may be carried out through banking apps or by scanning QR codes.
FIS’ PACE Pulse Survey 2020 found that there’s been a significant increase in the number of digital payments in India following the Coronavirus outbreak. The survey report notes that the majority of 51% of Indians said they plan to continue using digital or online banking services even after the pandemic has passed.
Meanwhile, in neighboring Pakistan, the majority of consumers (responding to a survey) said they plan to make digital payments for online purchases, instead of visiting physical stores, even after COVID.
While digital transactions are increasingly being conducted by people throughout the world, many consumers are still not able to use online platforms and services to settle payments. It’s still relatively expensive and complicated for many SMEs, particularly in developing countries, to conduct virtual payments. As reported by the Fintech Times, there were approximately 130 million SMBs in emerging markets that were still not accepting digital payments, as of April 2020.
As covered in August 2020, Fintech solutions can enable more widespread financial inclusion, and could increase the GDP of emerging markets by $3.7 trillion, according to a report from BNP Paribas.