For some years now, the payments industry has been incredibly dynamic: dizzying valuations, double-digit growth rates and a constantly increasing pace of technology advancement on a scale barely experienced in any other industry. A temporary decline in volumes due to Covid-19 should not be misinterpreted: we saw the corona virus completely alter the shopping behavior of consumers, pushing merchants to the brink of bankruptcy and shedding light on the importance of digital capabilities, all of which served as an additional catalyst in an already fast-moving payment industry.

One of the most obvious ways in which the corona virus crisis has affected the payments industry is in its economic impact. We are looking at reduced consumer spending, declining international trade and a global economy on the brink of recession will inevitably reduce the volume of transactions taking place.

Despite wide-ranging fiscal stimulus, it remains unclear how far the effects of weeks of lock down in countries around the world will be reversed. In addition, it will be difficult for some industries, such as tourism and airlines, to return to pre-pandemic levels in the coming months or years.

COVID-19 has changed not only the quantities but also ‘what’ and ‘how’ people are buying

In addition to the actual level of spending and what people are spending on, there has also been a significant change in the way consumers shop. Online transaction volumes have grown without precedent. Objects such as groceries or health supplies that were traditionally mostly purchased offline are now frequently and conveniently ordered from the comfort of people’s homes.

Payment behavior in-store has also evolved to a pace that would take years without such an unprecedented pandemic. Even the cash-heavy economies like Germany and Italy have seen a surge in (contactless) mobile and card-based payments. This was helped by an increase in the contactless payment limit from EUR 25 to EUR 50, a change which was decided and implemented in record time across most European countries. Further developing, merchants were actively encouraging customers to pay by card, ideally contactless, rather than using cash. This is something that not so long ago would have been unimaginable in many European nations. Merchants who only accepted cash were at a significant disadvantage and were quick to purchase POS terminals.