In the course of the coronavirus pandemic the world we knew has changed beyond recognition.
This has had a significant impact on the Payments sector, and resulted in new trends and unintended consequences.
Here are a few:
Should Businesses Be Expected To Work For Free During The Pandemic?
The first is the expectation that products and services should be available at no cost, or at the very least with a sizeable discount.
Now, I understand that many of us are in dire straits when it comes to our finances and disposable income, what with the economy being shut down for two months and counting. But what chance is there of a recovery if the few businesses that can operate are unable to pay their teams?
Is it acceptable for more people to depend on the government?
Here’s an example of what I mean. The incredible Colonel and recently knighted Tom Moore – who’s one hundred years old! – raised more than £30 million for the National Health Service doing a fundraising walk in his garden during lockdown. He used Justgiving’s online platform for it, but the company has come under fire for taking a percentage of what he raised in fees. Even the Prime Minister weighed in.
Why should the company face a backlash? The fees cover operating costs such as wages for 150 staff, and includes bank processing fees which it has no control over.
It’s unfortunate that their specialty in processing large volumes in payments is so undervalued. Surely critics don’t want the task performed by elements who lack the necessary accreditation and knowledge to do so?
I don’t subscribe to profiteering – especially not in the middle of a global pandemic. But surely where businesses can work and get paid, they should?
More Refunds In the Travel and Leisure Sectors
Another consequence of the pandemic on Payments will be an increase in refunds requested by customers, and the subsequent increase in related exceptions processing.
Customers who have booked flights and holidays don’t appear to be getting much in the way of good service. When things go wrong, whether self-inflicted or matters outside your control as a business such as a global pandemic, positive and proactive engagement with customers is the recommended and best course of action.
Unfortunately, customers have reported not being able to contact airlines, travel agents and others in this space, refund requests rejected and being strong-armed into accepting credit vouchers instead.
Since these businesses have prioritised issuing vouchers instead of refunds in a bid to survive, customers are waking up to their rights under Section 75 of the Consumer Credit Act of 1974 which protects credit card purchases.
As long as the transaction amount is over £100 but less than £30,000, any customer with a cancelled holiday can make a claim, since the Act makes the card provider and retailer jointly liable if a product is faulty, not delivered, fails to match the advertised description, or the retailer stops trading.
Growing dissatisfaction with the industry, coupled with customers’ genuine need for funds during this period means we are likely to see more of them go down this route.
Note: While refunds are not the same as chargebacks, there will be an increase in those too.
Rise In Contactless Payments
I’m usually an advocate for cash, but I haven’t touched it since the outbreak.
And I’m not alone: the use of contactless payments has jumped by 40%!
Card providers quickly responded to the demand by increasing the spending limit on contactless card payments from £30 to £45 from 1st April, which has helped customers complete many purchases without having to handle notes and coins, or input a PIN.
Making the Case For a Cashless Society?
And as more people use contactless cards more frequently, cash use has dropped.
There has already been a significant reduction in the infrastructure around cash as a payment method; could this drop further build the business case to continue down that path?
I hope not. Many use and prefer cash for various reasons, and let’s not forget that for a significant proportion without access to banking, it’s their only option.
Cash is crucial to facilitating and maintaining financial inclusion, and must not be removed from the landscape as a payment method. It has to stay available and affordable.
More E-Commerce Transactions
…and shop online. According to The Wall Street Journal, some countries have experienced a soar in e-commerce transactions have increased by as much as 81%.
Retailers with sleek, efficient supply chains and distribution channels have reaped a return on their investments (I see you Amazon), while those who have not kept up with the times in that regard must be kicking themselves.
It means that payment processors, acquirers and gateways are seeing more traffic than ever come through this channel, and it goes without saying that their infrastructure and back office functions must be robust enough to cope with the increase in volumes.