EC News DeskSocial distancing, quarantines and lockdowns imposed by governments to check the spread of Covid‑19 have accelerated the digitalisation trend with consumers preferring to shop online instead of physical stores and use digital payments instead of cash to minimise the risks of getting infected. In Italy, for example, between February and March 2020, retailers registered an increase in online sales by a whopping 90%. Dubai-based Majid Al Futtaim, which operates 24 shopping malls, saw a surge in online sales, with a 59% year-on-year increase in online customers in March 2020, according to a recent report by the Dubai Future Foundation.
Thanks to strict restrictions, there has also been a shift in categories from items such as apparel, accessories and electronics, lodging and airlines to everyday spends like food and groceries, medicines, household chemicals and personal hygiene.
Techradar.com had reported, quoting Ken Research, that in the UAE, online grocery orders had increased by 80-100% in the first months of the year, owing to Covid-19. In comparison, in Saudi Arabia, some online retailers had experienced a 200% increase in average sales in the early stages of the pandemic.
Online shopping in the West is also witnessing the influx of new demography of older customers, a group susceptible to Covid-19. The temporary boost they have provided to sales may become long-lasting if these customers continue shopping online after the outbreak subsides.
Efforts to reduce people to people contact combined with fears about contaminated currency have also triggered an increase in the use of cards and contactless payments. In South Korea, for instance, card and mobile payments grew 30% between January and February 2020, as did innovations in contactless pickup and delivery services.
Before the pandemic, more than 50% of face-to-face payment transactions in the UAE were made with contactless technology, and a consumer study Visa did with Dubai Economy, DED, in 2019 found that over 80% of contactless users trusted the technologies.
In many countries, central banks have lifted some of the restrictions and requirements applied to e-payment systems to overcome Covid-19. Safaricom, Kenya’s largest telecoms company and the owner of the M-Pesa mobile money platform, announced in mid-March that it would remove fees for all transactions under KSh1000, $9.42, while also increasing the daily transaction limit for small and medium-sized businesses from KSh70,000, $659, to KSh150,000, $1410.
In China, contactless digital payments at the point of sale, such as QR codes or NFC via e-wallets have experienced rapid growth to surpass cash and cards in-store transaction volumes and values. Interestingly, China’s experience with the SARS epidemic in 2003 helped launch digital payments and e-commerce in the country, according to the World Economic Forum.
The Chinese government, a recent post by WEF explained, focused on building crucial infrastructure in the areas of identity, internet access and legacy payment systems, all while encouraging domestic online payments and digital commerce through light-touch regulations.
These investments have paid off to the extent that digital payments have reached the threshold of attaining the status of a public good in China. Today, all kinds of payments ranging from taxi fares to mobile and utility bills to government fees and more can be transacted digitally. On a wider note, online retail sales in China accounted for over 35% of total retail sales in 2019, the biggest in the world.
The Covid-19 pandemic has seen an exponential increase in online purchases and payments across multiple markets, demographics and economic classes, and hastened the normalisation of their usage. Ecommerce and digital payments basically kept the economies running during the pandemic. With the current set of restrictions from the current pandemic expected to be with us for several years, it is therefore important that countries further strengthen their digital infrastructure, systems and applications to cope with whatever challenges future decades may bring.
By Sunil Paul, Co-founder and Managing Director of Finesse.
