COVID update: impact on payments

Published: 16/09/2020

The payment landscape in the UK and throughout the world has changed dramatically as a result of COVID sweeping the globe.

Here at takepayments, we’ve supported our customers and small businesses through this unprecedented time as best we can, so here we’ll break down the very latest information on how the world of payments looks today.

We’ll also present a snapshot of how that compares to some of the world’s leading economies, and finish with an overview of what small businesses can do to keep up and come out of the other side on top.

Payments in the UK

The impact of COVID on cash

The latest research by Accenture shows that cash usage is declining rapidly as a result of the pandemic, down 50% in March 2020, driven by three key factors:

  1. Isolation and being stuck at home has resulted in significantly fewer transactions being made in person.
  2. The most vulnerable people in society, and those most encouraged to isolate, are typically those most reliant on cash.
  3. Many businesses now discourage the use of cash or refuse it altogether, and consumers have been advised to avoid coins and notes for hygiene reasons. 

The alternatives

Research shows cheques were an alternative adopted early in the lockdown process, but the experts have argued they aren’t a viable, long-term solution.

Instead, contactless card and digital wallets i.e. Apple and Android Pay, have been suggested as the ‘natural successor’ to cash.

What next?

According to those in the know, COVID-19 will contribute substantially to the continued and rapid decrease of cash usage in the UK. Even before it hit our shores the prevalence of cash was on a steep downwards trend. 

Instead, the newer kids on the block will play a significant role in replacing cash in the UK for good.

The future of payments in the UK: tokenized payment instruments

Tokenized payment instruments is just a very technical term for digital wallets, and thanks to COVID-19 these are more popular than ever in the UK. 

The likes of Apple Pay, Android Pay, and other mobile payments offer a streamlined and simple consumer experience for:

  • Peer-to-peer,
  • Point of sale, and
  • E-commerce transactions.

They remove the need for PIN details to be entered and more often than not carry no spending caps. For these reasons, financial analysts have predicted that in a post-COVID world digital payments will be widely adopted.

Payments around the world

Now let’s take a look at how payments are changing in four of the world’s leading economies.

America

In the USA the payment landscape is less clear cut - before the pandemic cash remained one of the most popular methods of payment, accounting for 26% of all transactions in 2019.

While there are similar concerns by many over the risk of transmission when it comes to handling dollar bills, the American approach to payments hasn’t wavered as much as the UK’s and there has been no national guidance to suggest avoiding it. 

That being said, research is suggesting the ‘mighty dollar’ has lost some of its clout thanks to COVID as many businesses are encouraging contactless payments where possible.

One of the major differences between the UK and USA, and likely a driving factor in their alternate approach, is the population’s access to banking - particularly those from minority backgrounds - with an estimated 25% of the population ‘unbanked’, making modern payment technologies inaccessible.  

China

Details on the impact of COVID on China’s payments are a little more scarce, but at the height of the pandemic banks in the country did begin to disinfect and quarantine banknotes in an attempt to slow the spread of the virus. 

China is already a few steps ahead of some parts of the world when it comes to digital payments and they’re currently in the process of developing a nationwide digital currency, backed by the country’s leading bank. Details of its release are vague, but it’s expected to become widespread in the not too distant future. 

Australia

The impact on payments in Australia is much the same as the UK, with cash payments declining and contactless transactions increasingly rapidly - predicted to be more popular than ever following the pandemic.

Germany

Germany has a very strong affiliation with cash, and in 2017, cash was the payment method of choice for 88% of Germans. Enter COVID and things have made somewhat of a u-turn with cash payments actively discouraged for the first time ever. 

By late April 2020, 43% of Germans surveyed admitted they’d changed their payment habits and 68% said they were now more likely to pay by card. Adding to that, over half stated they’d ‘significantly reduced’ their cash usage. 

What does it mean for businesses?

For small businesses working hard to recover from the devastating effects of COVID-19 the consensus from financial analysts is they need to start accepting contactless and digital payments to maintain a competitive advantage both now and in the future. 

The good news is it’s easier than ever before to make the switch and the latest payment systems on the market are super simple to set up and start using.

The future of payments

Here at takepayments we offer three market-leading card machines, as well as innovative mobile invoicing solutions like beepaid, and three online payment solutions. Let’s take a quick look at each:

Card machines

  • Countertop - our countertop card machine sits on your point of sale and is plugged into your broadband or phone line with an ample two-metre cable (perfect for distancing). 
  • Portable - The portable machine boasts a 50m range, powered by Bluetooth, so allows you to take the machine to your customer hassle-free, ideal for the likes of restaurants and cafes. 
  • Mobile - Our mobile machine works using a sim card, just like a mobile phone, allowing for safer payments anywhere in the UK. 

All three of our top-notch terminals are set up and ready to accept the latest payment types including contactless and digital payments, Apple and Android Pay. 

beepaid

Our brand-spanking-new beepaid app makes accepting safer payments on the go a piece of cake, all you need is your mobile phone.

It’s totally contactless, no matter the size of the transaction, and installation and set up couldn’t be easier. 

Online payments

  • Payment gateway - our payment gateways make accepting online card payments through your website a doddle. They hook up with the majority of leading shopping carts, can be customised to match your branding, and leave you open to accept card payments 24/7.
  • Virtual terminals - with a virtual terminal you can accept card payments over the phone in just a few clicks. They’re a secure payments page which you log into while your customer’s on the line and enter their details - ideal for anyone shielding who mightn’t be tech-savvy or confident online. 
  • Pay by link - sending invoices by email and letting your customers pay digitally couldn’t be simpler thanks to pay by link. You don’t need a website to get started, just an email address and you’ll be able to create custom invoices, pay now buttons, and links in minutes. 

If you’re ready to update your payment systems to accommodate the impact COVID-19 has had on payments, you’re in the right place. We:

  • Don’t charge sign up or exit fees
  • Offer short 12 months contracts
  • Create personalised pricing packages, and
  • Have local consultants on hand up and down the country

So what are you waiting for? Get in touch to discuss your options and get the ball rolling today. 

Bryony Pearce

Bryony Pearce

Copywriter

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