The pandemic caused a huge blow to the economy, and it changed many aspects of our lives. For instance, since we need to limit our interactions with people, how do people make payments? TaxCorporation has the answers. The pandemic had a huge impact on how consumers make payments, and here are some reasons as to why that is.
A Huge Rise in Digital Payments
Firstly, March (the start of the pandemic and lockdowns) saw an intense rise in how many people used digital payment methods. Most people had to stay at home, but they still needed to buy things. Many people preferred to use a digital payment option to order things online to limit how much human interaction they have, which was a wise move for them.
According to Visa, they experienced a 150% increase in their tap-to-pay use in March compared to last year. There was a 200% increase in how many people signed up for mobile banking, and an 85% increase in mobile banking traffic. Mobile banking was more popular among young people, but many older people had to opt for mobile banking potions because older people were considered high risk during the pandemic, so they needed to find ways to make payments from home.
Higher Risk of Fraud
Despite reputable digital money services having excellent security systems, that does not completely keep people from dealing with fraud. Many digital payment platforms had to quickly enhance their digital security because there were more scammers that took advantage of the pandemic.
Luckily, digital payment platforms are offering smarter security measures to protect their client base. For instance, some digital payment platforms can detect odd changes in their client’s payment habits. If the client were to randomly order odd objects at hours they would not normally make orders, they may face a security check to prevent the order from happening.
Some people may accidentally send money to a scammer, which tends to be out of control for these platforms. The pandemic caused a lot of disputes and huge chargebacks for scams. Additionally, the start of the pandemic ruined many people’s long-term travel plans, causing a surge in chargebacks and disputes for travel expenses, recurring payments (gym memberships, subscriptions, etc.), and such.
Operational Resiliency
As mentioned earlier, mobile banking and other digital payment methods saw a huge rise in the first few months of the pandemic. This sudden surge was very steep and sudden, and a lot of financial providers and institutions were not ready to deal with the sudden amount of new customers and traffic that they were faced with.
Therefore, the financial providers and institutions had to adapt. Most of these businesses had to up their game with how many employees they have, security, and other tools to help them handle the sudden surplus of users that they have to attend to.
For better or for worse, the pandemic definitely impacted how consumers make payments by causing a rise in the use of digital payments, increasing the risk of fraud, and shocking the mobile payment industry.