Online payment transaction volume is surging as consumers confined to their homes are turning to digital purchasing channels. Sudden spikes in payment processing needs might cause challenges in handling for both merchants and payment processors. At the same time, there are projections that overall online payment processing revenues for the full year might decline as increases in online retail transactions are offset by declines in online travel purchases, including hotels and airlines, which generally have a higher average transaction value. Furthermore, the cross-border E-Commerce payments business has been negatively influenced by COVID-19.
The stock market valuation of major credit card and FinTech firms remains volatile due to COVID-19 developments. Many companies have seen their share prices decrease amidst overall stock market turmoil. Furthermore, payments industry leaders including American Express, Mastercard, PayPal, and Visa lowered their Q1 2020 revenue projections. Square reported a payments volume decline of around -25% year-on-year for the 10-day period in mid-March, signaling the worsening of COVID-19 impact in the USA.
The move to cashless has intensified as fear of exposure to the virus urges consumers to use electronic payment means in-store. This behavior is encouraged by payment firms and merchants. For example, a leading mobile money service in Kenya, M-Pesa by Safaricom, offered a temporary fee waiver for P2P transfers below a threshold and increased the transaction limit for M-Pesa transactions for SMEs. In the UK, Costa Coffee joined the list of merchants who no longer accept cash in their outlets due to COVID-19. Public transportation service in New Zealand announced plans to remove the cash payment option due to COVID-19. In India, Indian Oil Corporation Limited partnered with mobile wallet provider Paytm to enable digital payments at petrol stations and for fuel delivery. Moreover, digital payment tools could be used to distribute the financial aid offered by some governments. In the USA, a draft bill was revealed stipulating that a “digital dollar” and digital wallets could be used to disburse payments to qualified citizens.