How COVID-19 Is Changing the Way Consumers Pay for Purchases
Shelter-at-home protocols have caused many Americans to rethink the way they pay for purchases. Whether you’ve actively been in quarantine or you’re out every day as an essential worker, chances are you’ve made some adjustments to your payment strategies.
Let’s take a look at how COVID-19 is changing the payment industry and how likely these changes are to last in the aftermath.
A Big Boost for Contactless and Digital Payments
Last month, we predicted that contactless payments would see a sharp increase in adoption, thanks to the coronavirus outbreak. Mastercard has since confirmed that their contactless payments jumped 40% during the first quarter of 2020. Shoppers are opting for tap-to-pay and mobile payments as a way to bypass interactions with card readers. Mastercard CEO Ajay Banga says, “We think this trend will continue after the pandemic.”
The World Health Organization continues to recommend contactless payments to minimize germ interactions.
A Rapid Decline in Cash Transactions
As Americans shift to digital payments, cash transactions have declined. The coronavirus remains on banknotes for at least 10 days, and a single bill can pass through dozens of hands in a day. Consumers and businesses alike are limiting cash transactions in favor of card and contactless payments.
Interestingly, the city of Los Angeles has seen a sharp drop in money laundering and drug trafficking since the COVID-19 outbreak. Many storefronts used for money laundering are shut down because they are non-essential, thus prohibiting the flow of fraudulent funds. Cash transactions will likely pick back up after the pandemic is over, but they may remain slightly less popular than they were before.
Order Pickup Becomes the Alternative for Store and Restaurant Purchases
Order pickups have increased for large retailers, to the point that many shoppers are struggling to get time slots. There has also been an uptick in phone-based and online orders for restaurants, since food establishments can no longer allow guests to dine-in. As a result of these changes, card-not-present transactions could show an increase over the next few months.
How to Keep up with Payment Changes during the COVID-19 Outbreak
If you’re having a hard time keeping up with the changes, don’t worry. You’re not alone. In fact, 82% of Americans carry cash, and many rely on it as their only method of payment. If you do not have a credit or debit card, you could put your money on a secured credit card to use at the register or via a mobile wallet. Secured credit cards operate just like traditional cards. The only difference is that you are the one funding the initial credit line. If you make on-time payments toward your balance each month and keep your credit utilization low you could see your credit score go up. In other words, you could use this pandemic to improve your credit!
If you already have a credit or card, see if it offers a contactless feature. Seventy percent of debit cards are projected to be contactless by the end of the year. For non-contactless cards, you could use a mobile wallet to avoid touching payment terminals, or you can make purchases online or over the phone. Keep hand sanitizer around for times when in-person payments are inevitable. Wipe down your card, wallet and hands after the transaction.