The Impact Of COVID-19 Will Cast A Long Shadow On Payments

COVID-19’s effects on payments are primarily twofold: 1) physical changes in payment methods brought on by lockdown and consumer fear and 2) changes in spending patterns due to personal and macroeconomic uncertainty. One-third of consumers in China used digital payment methods for the first time as a result of COVID-19; 20% in Europe and 12% in the US did so; and roughly half the consumers in our survey plan to use cash less often once the initial lockdowns are over. COVID-19 presents firms with an unprecedented opportunity to turn forced adoption of online shopping and digital payment methods (such as contactless, mobile payment, and digital wallets) into permanent customer migration. The sting in the tail comes in years of suppressed transaction volumes as well as the migration of transactions to online channels and digital payments; together, these changes will make revenue generation harder for payment firms.