The recent outbreak of COVID-19, more commonly known by its family name – Coronavirus, has been the main topic of discussion across the globe. It has and will have long-term socio-economic impacts across the globe.
By now we should all be familiar with the key message from Governments and Authorities to keep washing our hands, but another key message should be: “avoid using cash to pay for goods and services”. Cash changes hands frequently and is exposed to all sorts of bacteria and viruses. According to the World Health Organisation (WHO), COVID-19 can remain on cash for days after being exposed to it. Countries are taking several measures. South Korea’s central bank started taking banknotes out of circulation, and even going to the extent of burning some. China used ultraviolet light and high temperatures to treat banknotes coming from high-risk areas.
In Europe, Visa and Mastercard are implementing increases to the limits of contactless payments. Limits have increased from €20 - €25 to €50 in many Euro markets and £30 to £45 in the UK. This would enable more payments to be contactless whether using cards and mobile devices. Contactless payments would be especially helpful in developing markets. Or in markets where cash is rooted deep in cultural behaviour, such as countries in Africa, the Middle East, and Russia, Germany, Italy, and Japan.
Consumers and merchants have been affected alike, with isolation and social distancing measures in place. Airlines and hospitality verticals have been affected the most. With many countries placing travel bans and restrictions to certain countries, as well as consumers choosing to reduce travel, travel companies have seen significant revenue streams disappearing. Supermarkets, on the other hand, have seen a sharp increase in revenues, with consumers stocking up on essentials, as well as an increase in general consumption due to consumers staying more at home. In Italy, one of the worst affected European countries by the pandemic, supermarkets have registered record sales. Consumers have also been increasingly shopping online for their groceries, to avoid leaving their houses. Online grocery shopping in Italy reached 20% of all grocery spend, from an average of 2%. This trend has also been seen in China and other markets which have been badly affected by the virus. France and the UK were some of the leading European markets in online grocery sales. Since the virus, we expect this to change, with Spain, Italy, Germany catching up to the levels seen in France and the UK.
The world will be different after the COVID-19 pandemic. Consumer behaviour is customarily slow to change when it comes to payment preferences. However, when there is a global crisis of this scale, consumers will adapt their shopping habits and modify their payment preferences. We have already seen that consumers and merchants have been forced to change their behaviours, adopting new electronic payments and shopping online for groceries. It will be interesting to see to what extent these habits will be retained when the situation reverts to normal. Some retailers have already stopped accepting cash in the last few days as a result of the concern that the virus can be transmitted this way. Some segments of society, such as the elderly, are fearful of sharing their payment details online, and this is expected to be the tipping point where we will see an upturn in the number of unique online consumers. What the long-term impact will be once this pandemic is under control remains to be seen. For now, stay safe. Stay at home and shop online.
Mark Beresford, EDC Director based in the London office, provided input to the article.
The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).