Payments Will Help Lead a Post-Pandemic Rebound, a New Report Argues

Payments are expected to play a significant role in the economic recovery that will take place as the Covid-19 pandemic eases, says a new report from Boston-based Aite Group.

The ways payments can help jump-start the economic recovery include reducing friction at the point-of-sale, increasing payment access, and integrating the digital and physical worlds of commerce, according to the report titled “The Impact of the COVID-19 Pandemic on Commerce and Payments.”

“Right now, merchants are having a tough time attracting new customers and retaining existing ones, if either have any money to spend,” says Thad Peterson, a senior analyst for Aite and author of the report. “Anything that can be done to remove friction from payments can improve sales and help with customer retention.”

One way to reduce friction at the point-of-sale is to increase acceptance of contactless cards and mobile wallets, as doing so can help in-store shoppers avoid contact with POS terminals or with cashiers. Contactless card usage has increased since the pandemic hit the United States in March, according to a data round-up from the U.S. Payments Forum, a Princeton Junction, N.J.-based payments association.

Visa Inc. reports that contactless card usage in the U.S. has increased 150% since March 2019. At the same time, mobile-wallet usage has grown in recent years, with 36.3% of global users having made a proximity mobile payment in 2019, the Aite report says.

“Consumers have been driving more contactless payment usage in-store during the pandemic for reasons related to social distancing, as opposed to merchants,” Peterson says.

Online shopping, which has boomed during the pandemic, as well as buying online and picking up in-store or curbside are expected to remain strong post pandemic as consumers continue to embrace the convenience of both channels, Peterson says. Target Corp., for example, reported Wednesday that e-commerce services and curbside pickup service jumped more than 700% for the quarter ended August 1. Overall, online sales and sales at stores open for at least a year climbed by 24.3% during the quarter, a record high, the retailer says.

Ways retailers can remove friction for online sales include keeping consumer credit cards on file to speed checkout, offering one-click checkout, or accepting PayPal.

“What merchants don’t want is for consumers to abandon a shopping cart during checkout because they have to enter a great deal of payment information,” Peterson says.

Adding alternative payment options such as Venmo, AliPay, or WeChat Pay can help attract and retain customers. Merchants can determine what alternative payment methods to add based on the geographic makeup of their customers. “If you have a lot of customers that live in Asia, adding AliPay or WeChat makes sense,” says Peterson.

Loyalty programs will likely be a potent customer-retention tool in the post-pandemic recovery, as they are a way for merchants to recognize a shopper’s value. “This is a tough time for a lot of consumers, and recognition of their value to the retailer will strengthen the value of the retailer to that consumer,” the report says. “Extend or eliminate point expirations and include powerful offers for specific actions, such as triple points for behaviors, products, or categories, that will strengthen the business. Also, POS loyalty programs have come of age in the past few years, and they provide an opportunity to immediately reinforce the customer’s purchase decision at the POS.”