Transformation at lightning speed
A decade of change in payments in mere weeks
The past weeks have brought an astounding amount of change. With COVID-19, the payments industry has evolved faster in 2 months than it typically does in a decade. The impact of the pandemic on consumer needs and behavior changed almost overnight, and these changes are expected to stick.
There are three major trends surfacing in these new behaviors: preference for contactless payments, spikes in card-not-present (CNP) transactions, and increased interactions with banking apps.
Contactless features are table stakes
The U.S. was slow to adopt contactless payments, but pre-COVID-19 projections were estimating significant growth of up to 8x between 2020 and 2024. This has all changed now. Costco alone reported a 60% increase in contactless transaction in March and 38% of consumers stated that this is now an expected payment option when shopping in the store.
The fear of virus spread has consumers and businesses rejecting the use of cash and even the handling of payment cards, but 70% of new contactless payment users say they plan to continue using this feature post-coronavirus.
Online transactions have skyrocketed
PSCU reported that April spend reflected a jump in card-not-present transactions – up to 63% from just 35% in 2019. Shelter-in-place orders had Americans leaning toward online purchases and delivery of groceries and other necessities – many for the first time. Of total retail transactions, online shopping has traditionally increased by about one percentage annually, but a UBS analysis is predicting a 10-point jump – from 15% to 25% of retail transactions – in just months. Over half of new users have stated that they plan to continue shopping with online transactions.
Consumers rely on their banks
In times of crisis, people turn to their financial institutions for information, reassurance, and support. Stressed about the economic impact COVID-19 would have on them personally, consumers are turning to their banks for information, inundating and overwhelming call centers. Financial institutions with strong mobile platforms are able to advise customers and give them information online and in-app.
Stimulus payments in the US brought with them a previously unseen spike in mobile registrations as a platform for depositing these funds. FIS reported that the payout of stimulus funds was directly driving consumer behavior changes and the momentum to mobile banking and apps.
As John Koetsier, a contributor to Forbes, said “Consumer use of mobile finance, banking and insurance apps jumped 71% in 2019. In 2020, however, they’ve gone from a vitamin to a vaccine. In other words: from nice-to-have to essential.”
What does this mean for financial institutions?
Your account holders are relying on you now more than ever. This is the time to respond to their needs in a way that brings them control and comfort – including making sure your digital roadmap is updated and includes a strategy for card modernization.
Looking for more resources? Check out this infographic with 5 features of the digital-first card.