The Impact of Coronavirus on Consumer Finance

June 2020

The COVID-19 pandemic has altered the traditional consumer finance and payment landscape in a short period of time, and, given its scale, the impact is likely to remain for some time. Card networks, issuers and fintech face a variety of opportunities and challenges in this evolving landscape. The transition away from cash will accelerate, benefiting cards and electronic payments, and there is the capacity to increase the overall value of consumer payments going forward.

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This report comes in PPT.

Key findings

Move away from cash to accelerate

Consumer payments have been moving away from cash over the last decade, but the rate and degree of migration has been significantly accelerated by the COVID-19 pandemic.

Debit payment value to increase at expense of credit

In terms of card function, debit payment value tends to increase during economic downturns, as consumers deal with uncertainty by reducing debt and increasing savings. As a result, total credit card payment value is likely to decline.

Card rewards to get an update

Loyalty and reward programmes have come back into focus for consumers who are more value-orientated as result of the pandemic. For example, travel- or experience-based rewards are less useful to consumers in a pandemic.

Greater demand for value-added services related to payments

Merchants which were previously only store-based, as well as established digital retailers, are in greater demand of data and analytics of consumers in their market, and payment networks are well positioned to provide solutions.

Contactless to become the standard

Without a vaccine for COVID-19, consumers will remain hesitant to interact directly with merchants and traditional POS card acceptant machines, leading to an increase in demand for contactless cards and terminals.

Fintech to bridge the unbanked gap

Fintech was already addressing the unbanked and financially underserved around the globe, but the pandemic has increased the segment of the population who need financial products and services.

Growth in the value lost to fraud

The rapid transition of commerce online has contributed to more digital and card payments, and has brought in consumers unfamiliar with the digital landscape, which will increase the value lost to fraud going forward.

Cash continues its decline
COVID-19’s impact across payment players
Key findings
Global economy will contract sharply in 2020
The COVID-19 pandemic impacts both supply and demand
In our baseline view, the pandemic peaks in June 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecast real GDP growth in 2020 under different scenarios
Fiscal stimulus a challenge with restrictions on expenditure
What could alleviate the economic effects of the pandemic?
What could exacerbate the economic impact of the pandemic?
COVID-19 presents opportunities and challenges for networks
Cross-border spending to drop dramatically
Providing additional services and products
Consumer card function preference to shift again
Making contactless the standard
Issuers better prepared than before but will still struggle
Providing billing flexibility
Non-performing loans expected to rise
Making rewards relevant
Expanding product portfolio
Fintech developing solutions to a changing retail environment
Bringing financial products and services to consumers
Moving merchants online
Making security a priority
Enhancing the purchase experience
Key findings
Uncertainty regarding the impact of COVID-19
Challenges and opportunities in the payment landscape
Data parameters and report definitions

Consumer Finance

This is the aggregation of ATM, charge, credit, debit, e-purse and retail cards. Note that smart cards are not included in financial cards.

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