The COVID-19 pandemic has caused a fundamental shift in the way customers make their retail payments, particularly in the emerging economies like India. Though customers were slowly marching towards digital payments over the past few years, the COVID-19 crisis has swiftly condensed the transactions of card payments, online commerce, contactless transactions and digital wallets in just a few months. Nevertheless, the crisis has persuaded the consumers to accelerate their shift towards digital payment modes, says GlobalData, a leading data and analytics company.
Both online retailers and brick and mortar stores across India are striving to offer alternatives to cash transactions, especially towards contactless payment methods such as mobile wallets and mobile payments to keep customers and employees safe from contracting the virus by reducing physical interactions with paper money and cashiers. Therefore, digital wallets and mobile payments have now become a norm across the retail landscape.
In the GlobalData Coronavirus Tracker Consumer Survey (5,500 respondents in 11 countries) conducted during 25-31 March 2020, over half (54 percent) of consumers somewhat/strongly agreed with their preference to pay for products with credit cards. This number rose to 57 percent in the survey conducted during 26-31 May. At the same time, the percentage of consumers that disagree with this sentiment fell from 35 percent to 33 percent during the period. Though the movement is marginal, it points to an adoption pattern where consumers increasingly favor making product purchases with credit cards and other digital modes instead of cash.
Vijay Bhupathiraju, Retail Analyst at GlobalData, says: “Earlier, mainly millennials favored cashless point-of-sale, online or mobile checkouts for their convenience. However, the pandemic has forced the not-so tech savvy older generations to embrace mobile purchasing out of necessity – making it imperative for the retailers to adopt the latest payment methods.”
Moreover, the need to maintain social distancing and consumers’ unwillingness to queue for long at traditional checkout counters is driving the move towards smart watches or payment apps instead of entering PIN numbers when performing digital transactions. Amazon’s ‘Amazon Pay Smart Stores’ initiative and Google Pay’s roll out of its ‘Nearby Stores’ feature in India are aimed at offering contactless payment options to customers amid the on-going pandemic crisis.
Additionally, retailers such as Amazon, Walmart and Azbuka Vkusa have launched cashier-less store formats where customers can collect their products and walkout of the store with beacons, NFC or Wi-Fi technology taking the payment automatically. This enables retailers to avoid human interaction within stores.