PSP Angels

VIKTORIA SOLTESZ

Founder of PSP Angels

Finding the good in the bad – how online payments can help to rebuild the economy what COVID ruined

2020 made transformations we have never seen before.

First of all, it completely transformed customer behaviour. We always knew that we are heading towards a more digitalised era, but this pandemic speeded up the process more then we could imagine. The online payments are now more in-demand than ever, which is opening great opportunities for new players and non-traditional providers.

Also, in such a short time we saw so many industries falling – the travel, F&B and face-to-face operators are all collapsing. Never before stock market crashes pushing the economy into recession.

It’s not only Jeff Bezos and the mask manufacturers who piled up their billions through their digital ecommerce empires.

Since contactless or online payments are the only way to keep social distancing possible as opposed to cash and face-to-face purchases, several payment service providers are opening champagnes throughout 2020. Payments not only saw a never-before profit during the first quarter of 2020, the bullseye was hit again in Q2 when their biggest competition, Wirecard fell.

Customers have stricter and stricter expectations when it comes to payments: everyone demands maximum access, flexibility and convenience. We all get more tech savvy too – we all have a payment app, online banking and heard about blockchain. It’s no longer only the young generation who uses electronic currencies such as Bitcoin to enjoy quicker, better and more reliable payment options.

And as we know, with new demand, new supply is born. The banks are no longer cash handling offices at the end of the road, but modern and agile fintech companies. So, its not a surprise that the large technology and social media companies such as Amazon, Google and Facebook are also trying to break into the payments market and take a piece of this tasty, multibillion pie.

Familiar? Have we seen this all before? Yes. In 2013.

China is now the global leader when it comes to digital payments. Looking back to the history, it’s obvious why: several new payment methods have been born and implemented, after SARS hit China back in 2013. These new ways not only helped the economy bounce back to its original state, but also made China to be the e-commerce leader.

Its not a secret that during the coronavirus crisis, the digital payments have been keeping economies running and helping people reduce contact with the virus. China’s “less cash – more digital” society not only helped to sustain the quarantines and reduce the virus transmissions but also built a solid foundation for further digital fintech developments.

During the pandemic, local governments have distributed vouchers through WeChat Pay to encourage immediate spending, Alipay overtook PayPal as the world’s largest mobile payment platform in 2013 (Alipay is now the world’s number one mobile payment service organization and the second largest payment service organization in the world.) and WeChat Pay was born, which is now China’s Second Largest Mobile Wallet. Chinese e-commerce and online payments exploded after SARS.

Transforming from cash-upon-delivery to a modern mobile-payment-upon-delivery system was easier and quicker than we thought. The sudden and forced new rules become a permanent shift in the behaviours in China: consumers enjoyed the seamless purchase experience from the comfort from their homes and refused to go back to their old habits of juggling with dirty coins and notes.

There were other benefits too. With the increased digital payments, the compliance forced the population to be more up-to-date with their KYC.

About 960 million of Chinese people had formal identification in 2003, removing one of the most common impediments in the world to account ownership – a lack of identity documentation. By 2011, 64% of Chinese had an account either with a bank or e-money provider, nearly double the penetration of India. Bank account ownership was used as a proof of identity for online payments, which made the initial sign up to the new platforms easier and cheaper.

Viktoris Soltesz Founder of PSP Angels

SARS, COVID – or simply the internet which changes in the planet, we all know that the world is heading towards a more digitized state. Even if the virus gets weaker, the social distancing is embedded in all of us now. We now all got used to online payments just as much as to hand sanitisers and masks.

But just as in the yin-yang symbol – there is a small good in the bad. China should be the greatest example for all of us of how to turn a disaster to an opportunity and move on to build a bright future.