Amid the new reality of life around the globe due to the Covid-19 outbreak, cashless payments are increasingly the norm as more consumers avoid cash, which is known to harbor viruses and bacteria. In fact, the World Health Organization (WHO) recently asked consumers to avoid handling cash and switch to contactless payments whenever possible in order to minimize the spread of coronavirus. And most restaurants are requesting cashless payments to help prevent further sickness.
Because of this upswing in cashless transactions, one area of brightness in the economy is financial technology firms (FinTechs). The increase in uses of Apple Pay, Square, Stripe or PayPal to pay for transactions means these businesses are benefitting to some extent as more people realize they now need these kinds of payment services.
“You should have greater mobile apps and digital adoption in general. If I had been holding off on signing up for PayPal, for instance, I might just do that,” noted Nigel Morris, managing partner of QED Investors and a co-founder of Capital One in an interview with American Banker recently.
On the other hand, since these services are also at the core of e-commerce transactions, some analysts predict they may also experience a hit because of the pandemic. As non-essential businesses are shuttered and many economies have nearly ground to a halt for now, so has online shopping and payments for goods. PayPal itself recently announced it expects current events will lead to at least a 1 percent drop on a foreign currency neutral-basis.
“People are holding off on doing lots of things,” said Peter Wannemacher, principal analyst at Forrester to American Banker.