The impact of Covid-19 is visible, and it has brought down so many major sectors which eventually harm the global economy including automobile, travel and tourism, retail, aviation.
To cope with the effect of Covid-19, developing nations like Brazil and India made a lot of steps to stop the spread of the deadly virus including closing down transportation, shutting down public places, and limited people’s gathering, and maintaining social distance.
The spread of the virus has badly impacted the entire market. But there are a few markets that have witnessed a boom. One of them is the digital payment sector.
Though, experts do witness the declining usage of online transactions in industries like the airline, tourism, entertainment, and other important sector. There’s also a decline in international online transactions because of closed borders.
However, some sectors have witnessed tremendous growth in online transactions during a pandemic. Sectors like OTT platforms like YouTube, Netflix, and Amazon Prime, food delivery application and eLearning application, bill payment application.
The reason why it witnessed such growth is governments across countries are promoting digital payment and informing people of the importance of digital payment. Earlier, digital payment was more about convenience, but now it is an essential thing. Most of these sectors contributed a lot to the growth of eWallet application. So, it is important to understand the role of Covid-19 on the eWallet app development.
Here in this informative blog post, I will talk about the role of a pandemic on the digital payment solution and discuss how this can help you grow your online business.
How is the Digital Payment Industry Affected?
With the uncertain market trends brought by Covid-19, people are now thinking a lot before spending money, which has brought a decline in consumer spending. This has displayed a negative effect on the online payment system and banking systems that make money from transaction fees.
Based on the McKinsey statistics, the revenue of online eWallet applications is going to reduce to 10% and it will be approx. 1.86 trillion US dollars by theendof this year. Before the Covid-19 pandemic, they expected the digital payment market industry to reach 2.17 trillion US dollars by the end of the year 2021.
Though, famous Fintech experts say that it is too early to evaluate the impact of Covid-19 on the digital payment sector. The impact could be helpful for a long time. Because few industries which have been completely shut down during pandemic will open up again that eventually increases the number of online transactions.
Covid Impact on Different Sectors of Digital Payments
Digital payment gateway
While some industries like Airline, travel and tourism, entertainment, hospitality, and nightclubs are completely shut down because of Covid-19 and reduces the number of online transactions. Below we will read about the impact of covid-19 on several industries:
Digital Payment Through Mobile Banking
Based on the research by the MX, which is a digital platform for credit companies and banks, witness a growth of 50% in the year 2019. The research also informed us that the transaction made through debit cards or credit cards decreased by 25% during the time of Covid-19.
Based on the research by the payment firm named FIS, 45% of people have completely transformed the way they make payments now. Earlier they used to go to the bank for a complete transaction. The study states that 31% of users have stopped accepting cash payments and would mostly opt for cashless payment methods because of Covid-19.
Not only consumers but also government authorities are promoting the online banking system, as it is a convenient and simple way of completing the transaction. Mobile banking ensures social distancing, which is the need of the hour. Digital payment helps stop the spread of covid-19.
Digital Wallet Adoption is on Surge
Covid-19 has promoted the use of eWallet mobile applications like Paytm, Phonepe, and other payment gateway applications. These applications are like net banking, eWallet applications consume less time and make the payment in few seconds.
Additionally, most eWallet application offers seamless integration with the businesses, which makes it easier for customers to make payment. Well, in developing nations like the digital wallet is sparkling bright, eventually. Pandemic boosted up the growth of eWallet usage in India.
Not only just customers but retailers are also opting for the eWallet application as it enables them to receive payment online. They can transfer that amount to their savings account with zero transaction fees.
Digital Payment Through Card
Digital payment through debit cards or credit cards has seen a growth of approximately 75% during the time of Coronavirus, based on the report of PayPoint. The upsurge is because the consumers don’t want to deal with cash because of the virus strains.
During the first wave of Covid-19, at the beginning of a few months, we witnessed a drop in people using ATMs from 39.9% to 31.1%. The reason is the same above that people don’t want to deal with cash and have stopped going out.
International Payments
International transactions are affected hugely because of Covid-19. International payments have witnessed a decline of 20% since March 2020. This decline is increasing with the transit of time. The main reason behind this decline in international travel and the fall of migrant employees.
Well, the fall in the online international transaction not only impacts the migrant employees but also makes it tough for the payment service provided to deal with such low rate flows and low exchange rates. Also, the remote working culture leaves a tremendous impact on the payment service providers’ work for smooth operations.
Business Sectors With Negative Impact
As mentioned above, the coronavirus has impacted all major sectors and create a dent in the global economy. Because people are at their home and several other restrictions.
Hence, the income of people who work in sectors like a movie theatre, offline shopping, and automobile and retail industry. The digital payment came down because of the above business industries because of the advantage in the movements.
Business Sectors With Positive Impact
With the emergence of coronavirus, the use of eWallet applications and online payment gateways has gone up because people are making online transactions for everything included grocery shopping, OTT subscription, and important bill payments, and much more.
Covid-19 Uncertainty Set to Continue
Well we can’t predict how long this virus is going to stay with us. There’s one thing that we know that the digital payment methods will go to stay with us because consumers are opting for eWallet applications.
Another visible thing that is going to stay with us is the people’s choice from shifting from cash payments to cashless payments.
For vendors opting for eWallet app development, functionalities are no longer treated as the facility. It has become an important thing. Any kind of business, whether it is offline or online, needs to accept digital payment in times like this.
To Conclude
After the Covid-19 outbreak, companies have accepted digital payment for almost everything. Few of these sectors have witnessed some positive impact while other have seen some adverse effect. After reading this post, one thing is sure you must get the information that it affected what type of business more and what thrives in times like this. But you must have got it that eventually, all businesses need to adopt the digital payment system. If you are a company that is looking to integrate a smooth payment system then choose Arka Softwares which has a team of seasoned developers, designers who develop top-notch digital payment and mobile wallet solutions.