Due to COVID-19... "Payment Market Must Address 'Digital Polarization'"

Goddess Finance Research Institute
'Post-COVID-19 Global Payment Market Trend Change Outlook'

[Asia Economy Reporter Ki Ha-young] Advice has been given that measures should be prepared to address the digital divide within payment methods due to the global spread of the novel coronavirus infection (COVID-19).

According to the report "Post-COVID-19 Global Payment Market Trend Changes Outlook" released on the 23rd by the Credit Finance Research Institute, changes in consumer behavior due to the impact of COVID-19 are also affecting the global payment market. Representative examples include a decrease in card transaction volume centered on physical cards due to the contraction of offline consumption demand and the popularization of contactless payment methods.

As concerns about COVID-19 transmission increased, consumers refrained from going out, leading to a decrease in purchasing activities at offline stores, and the avoidance of face-to-face contact intensified, activating untact consumption. Major overseas countries such as the United States implemented store and public place closure measures in response to the spread of COVID-19, resulting in a sharp decline in consumer spending and a corresponding decrease in credit and debit card transaction volumes. For example, Visa's card transaction volume in the U.S. market decreased by 4% year-on-year in March.

Furthermore, contactless payment methods and non-face-to-face online payments have become popular after COVID-19. According to a survey conducted in March by U.S. market research firm RTi Research, consumers showed higher levels of concern about COVID-19 infection from cash and cards, which require contact, compared to non-cash payment methods. Among 500 consumers surveyed about the possibility of COVID-19 infection, the proportion who responded "very or extremely concerned" was cash (29%), physical credit/debit cards (22%), and non-cash payment methods (17%) in that order.

Additionally, RTi Research reported that since the outbreak of COVID-19, 30% of surveyed consumers started using contactless payment methods such as NFC, various pays, and mobile wallets, and 70% of them answered that they would continue to use these methods even after the end of COVID-19.

Although the expansion of digital-based payment methods has become clear after the outbreak of COVID-19, it is expected that the full spread of contactless payment methods in the short term will be difficult due to the entrenched usage habits of basic consumer groups regarding physical payment methods such as cash and cards.

However, the Credit Finance Research Institute forecasted, "If COVID-19 persists for a long time, digital polarization within payment methods may occur, centered on digitally marginalized groups such as the elderly, due to the popularization of contactless payment methods," and added, "It will be necessary to prepare countermeasures for this."

This content was produced with the assistance of AI translation services.