COVID-19 is Driving Innovation in Payments, For the Better

The global pandemic has accelerated Canadians’ use of technology in all parts of life. We are using video conferencing to conduct meetings, watching virtual tours to buy real estate and choosing touchless and contactless methods to pay for everyday items.

Now retailers and payments industry experts are looking ahead to the rest of 2020 and beyond to see what trends will emerge in Canadian payments and how will we continue to innovate in this space.

When it comes to payments, the infrastructure, in many cases, was already in place. Consumers just had to be encouraged to start using it. For example, the ability to tap and go, e-transfer money and mobile deposits has been around for years. But the pandemic has changed consumer behaviour dramatically, and Canadians are learning new ways to pay and get paid.

Changing how we pay 

A survey by Payments Canada finds 53 per cent of Canadians reported using card or mobile tap payment for in-store purchases more often than pre-pandemic. 62 per cent of Canadians reported using cash less often than pre-COVID-19. It reveals how our habits are quickly changing to adapt to the current situation.

In most cases, once a consumer has found an easier, safer and efficient method to pay, the chances are they won’t go back. As the pandemic continues with no end in sight, what innovations in payments can we expect for the rest of 2020 and beyond?

“The pandemic is rapidly accelerating the shift toward a cashless future. We anticipate the increased reliance on digital payments is here to stay. We now live in a world where contact is constantly being restricted and that has had a profound impact on consumer habits,” says John Kunze, Senior Vice President of Branded Experiences, PayPal.

PayPal recently launched QR code payments in Canada, a touchless way for consumers to pay for items using their mobile phone. The QR code method does not require the retailer to buy new technology. PayPal says sellers can print a QR code and place it on their table, or display it through a mobile device, and have their customers simply scan the code, enter the amount they’re paying and send money immediately. PayPal says this will allow retailers to quickly get up and running on the contactless system without spending any money to upgrade infrastructure.

“From local stores to hair salons and farmers markets, this new functionality in the PayPal app allows customers to buy or sell in-person, safely and securely without needing to purchase any new equipment,” Kunze says. “With our QR code solution, we want to offer small business owners a short-term solution to receive contactless payments and thus support their business during the pandemic and beyond.”

Looking ahead, PayPal says customers and retailers will continue to want minimal physical interactions when it comes to financial transactions, at least until the pandemic is over. Even beyond the pandemic, contactless payments will continue to be the preferred method for many.

Michelle Beyo is the founder Finavator, a firm that consults with businesses on how they can provide innovative payment and digital services to their customers. Beyo believes COVID-19 has accelerated the payments landscape by as much as 10 years. Companies are now looking at plans they were not expecting to execute until 2030. She says consumers have driven this change.

“Most people are shopping online. It has doubled since the pandemic started,” Beyo says. And, she suspects consumer activity has been changed forever.

“From a consumer perspective, when you go to the store now instead of using your credit card and typing in your pin, a lot of people are using their contactless payment on their credit card, whether that be their prepaid card, their credit card, their debit card, so they don’t have to touch the machine,” Beyo adds.

Changing how we get paid 

 How we get paid is also changing, especially for those who work as freelancers or in the so-called gig economy, as the pandemic has highlighted the dangers and difficulties of physical invoices and cheques.

Spicer Matthews is the founder and CEO of SkyClerk, a software application that makes accounting simple and easy for freelancers and solo entrepreneurs.

“The biggest problem every freelancer has is getting paid. Many are not aware of modern technology that has been available for the last couple of years. The first way to get paid fast is to accept some sort of digital payment and everyone quickly thinks credit cards. But a lot of freelancers don’t want to accept credit cards because credit cards take such big fees,” Matthews explains.

Matthews actually sees more innovation coming in the infrastructure we use to make and receive payments.

“The biggest bottleneck forever has been the big banks. Once these banks innovate, and make seamless instant payments possible then the next piece is just consumer awareness. We have contactless payments now with Apple Pay or Google Pay but we’re going to see more retailers pushing that and accepting that and having the technology in place to accept that,” Matthews says.

For freelancers who may be used to getting cheques in the mail, most will insist they be paid digitally with no fee applied.

Another sector where instant payments are important is last mile delivery. This includes anyone who works for food delivery services or online package delivery, and many of these workers are self-employed and struggle to get paid on time.

Marco Margiotta is the CEO of PayFare, an online platform that helps gig workers get paid instantly. Margiotta says COVID-19 has increased the need for last mile delivery services that are contactless and safe.

“There’s a really huge opportunity in providing any gig platform with the same type of instant payment solutions,” Margiotta says. “As Canadians start to recover from the effects of the global pandemic, many workers will be looking for ways to get paid faster.”

“Our view on the recovery after all of this, when we start getting to a new normal, people will be looking for instant payment. Whether it’s them digging a hole into debt and wanting to climb out of it, or just having a short-term cash cap until they get back to normal, there’s certainly going to be no shortage of people looking to have payments come to them quicker.”

Payfare’s CEO also believes there will be pent up demand for instant payments services going into 2021 and beyond.

COVID-19 is creating opportunities for sellers to upgrade how they get paid, and forcing consumers to learn new technology.

Looking ahead 

These are the major payments innovation trends we can expect for the rest of 2020 and beyond:

  • Small businesses will have digital capabilities that rival the bigger stores, including more options for contactless payments, fast check out and infrastructure provided by trusted financial institutions.
  • SMEs, or small- and medium-sized enterprises, will move to provide a more robust online experience by making it easy for customers to order and pay for items online.
  • Solo entrepreneurs and freelancers, who are used to getting paid from several sources, will streamline their payment process by moving it to digital and insisting their clients pay them quicker and contactless.
  • Canadian small businesses will continue to shift to e-commerce. Pre-pandemic, many businesses were successfully running brick-and-mortar operations, but the dramatic uptick in online shopping since March means those businesses must change.

Both Kunze of PayPal and Matthews of SkyClerk say consumer behaviour has been changed forever. Those who now use contactless payments or made a quick purchase online for the first time will probably not go to back to using cash or any other system. Innovation therefore will continue to support the contactless trends that are safe, reliable and affordable to retailers and consumers.





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