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May 06, 2020

The Outlook for Payment Processing After Coronavirus

Social distancing is bringing various aspects of our lives into sharper focus. For example, our nation’s approach to sports is evolving. And the way we get our food from grocery stores will likely never be the same.

While football games and grocery runs are part of many Americans’ lives, they aren’t daily events. That’s what makes payment processing different. It’s also evolving during this disaster. And it will have a more outsized impact, as it’s something we engage with nearly every day as both business owners and consumers.

“There are many uncertainties about how the coronavirus will impact people’s health, their jobs, and the economy, but some consumer trends have already become so obvious that they suggest a long-lasting shift in people’s behavior when the COVID-19 crisis finally departs,” explains a business report from CNET. “One of them is the move toward contactless transactions in the US getting supercharged, as shoppers try to restrict what they touch in stores—if they go out at all—to avoid catching the virus […] Now retailers that remain open are scrambling to respond to this new consumer need.”

A Solution Worth Scanning

Contactless payments are already used almost exclusively in many countries worldwide, and this crisis has made the payment processing technique more crucial than ever. In response to growing demand, companies like Visa and Mastercard have begun raising the value limits for contactless transactions around the world. This action allows consumers to maximize their shopping opportunities and feel more confident using the payment method when so many other parts of their lives might be in shambles.

While contactless payments checks many of the boxes necessitated by social distancing, it’s surprising to many that it hasn’t fully caught on yet in the United States. Customers might be dragging their feet due to unfamiliarity with the process, but the pushback often comes from business owners. It’s no fun updating your payment systems for new technology, but when it can be a factor that saves your business, it becomes a lot more agreeable.

The Contactless Trend Is Kicked Into Gear

Thus, coronavirus is likely doing what hundreds of ad campaigns from Visa, Mastercard, Apple Pay, and Google Pay couldn’t: convince America to ditch the cash and traditional credit cards.

As the old saying goes, “Necessity is the mother of invention.” In this case, it would seem that necessity is also the mother of adoption. Research shows that roughly 40% of America’s small businesses have been forced to close because of the coronavirus pandemic. And the businesses that have been able to keep their doors open are facing dire conditions, with 50% reporting a drop in sales.

What has become apparent is that success can often be found at the confluence of shopping and social distancing. But striking that balance remains a challenge for many businesses.

“As our data shows, there are definitive impacts that the COVID-19 pandemic is having on the American small business,” said Mike Strawhecker, a payments processing expert. “But we also see bright spots in the midst of this challenging time—optimism from small business owners and an ability to capitalize on socially-distant commerce like contactless payments and online shopping.”

Indeed, contactless payment offers glimmers of hope on the horizon. About 36% of businesses are actually seeing higher sales during the coronavirus crisis. And of those businesses, 27% say that contactless payments have played a role in that trend.

How Will You Proceed?

If your business already uses contactless payments, you might feel as though these small business studies are merely preaching to the choir. You likely understand the convenience and security the technology offers and would prefer that it become the default, much like it is in parts of Europe.

On the other hand, you might be a holdout. There are plenty of good reasons for you to have not yet made the transition, and the prospect of integrating new payment processing systems at this chaotic time might seem daunting.

But make no mistake; whether you’re a cheerleader or a detractor, you’re going to need to consider contactless payment in the future. With the possibility of social distancing extending into 2022, consumers are going to be forced to move in this direction. Businesses that adapt will be primed to succeed, while holdouts run the risk of alienating customers, missing out on sales, and appearing out of touch.

The future remains uncertain, and timelines have yet to materialize. But that’s no reason to drag your heels. The improvements you make to your payment processing today will pay dividends tomorrow, as customers increasingly seek out businesses that make their transactions easier and safer.

About the author

Grant Olsen
Grant Olsen
Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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