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.
This report comes in PPT.
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.
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.
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.
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.
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 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.
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.
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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