- The WEF article argues that the experience of SARS in 2003 put China on an accelerated path to digital payments.
- There is an obvious COVID benefit to digital & contactless payment systems – limiting person to person contact, while allowing commerce to continue.
- They make the point that for digital payments systems to be successful they don’t need a credit card culture (which was absent in China)
- Now China has the infrastructure to make contactless payments (often via QR codes) to services as diverse as taxi drivers, street vendors & even temples & beggers => Been there, saw that.
Analysis and Commments
- Despite the temptation to write about the other side of changing food consumption (take away deliver), let's go for a different angle …how the lock downs are accelerating the shift to online payments.
- Yes, there are challenges. Payments for travel & events such as concerts, which were previously a big element of typical online spending, have dropped sharply. But they will be back, timing unclear.
- The crisis has accelerated what was an already growing sector. Worldline estimates that the cashless transition has accelerated by 1-2 years, PayPal estimates eCommerce adoption has accelerated by 2-3 years, and Mastercard saw a 40% growth in contactless transactions worldwide in the first quarter.
- As with online food retail, the question is how much these gains will be retained. Personally, I don’t expect consumers to go back to their old ways.
- Yes, there will be some shift back to physical shopping using cash, but my expectation is that the shift to digital will become a sustainable change in behaviour.
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