The COVID-19 pandemic has propelled consumers and companies towards e-commerce and cashless payments worldwide. As lockdowns, social distancing and health problems pushed millions out of physical stores, retailers and consumers alike became accustomed to digital platforms and contactless payments. What was at one time a crisis-driven change is fast-becoming a lasting pattern as internet shopping and cashless transactions bring convenience, safety and efficiency to a post pandemic world.
E-commerce surged during the pandemic as customers shop online from home. From small merchants to big multinational corporations, companies were scrambling to improve their digital presence. Sales soared for businesses including Amazon, Shopify and Alibaba as companies with very little or no online infrastructure struggled to keep up. Global e-commerce sales increased by 27.6% to USD 4.28 trillion by 2020 (UNCTAD), well below pre-pandemic projections.
The necessity for e-commerce during the pandemic dramatically altered consumer behaviours. Some customers who were uncertain about internet shopping tried it and found it convenient. Food, things for the home, clothes along with services such as telemedicine and virtual fitness classes all became staples of internet commerce. For many, these behaviors are ingrained because online shopping enables delivery, ordering, and browsing in a few clicks. Brick-and-mortar stores are opening again, but e-commerce has solidified its place in the future of retail with its convenience and accessibility.
The flu pandemic also sparked brand new e-commerce models for companies. Standard brick-and-mortar shops widened their BOPIS (buy online, get in store) offerings or even moved to curbside pickup as need dictated. Some restaurants provided food delivery and contactless ordering, and subscription based solutions exploded in some other industries. The adoption of direct-to-consumer (DTC) sales likewise increased because brands more and more bypass traditional retail channels and market directly to customers directly through the sites of the brands.
In addition to e-commerce, the pandemic encouraged cashless transactions. Cash was once the most popular form of transaction but worries of virus transmission through physical currency made it less attractive. Contactless payment methods like credit cards, mobile wallets (Apple Pay, Google Pay) and QR codes became mainstream because companies and customers placed safety and health first. In 2020, research firm Accenture found that contactless payment transactions in Europe grew 50%, and similar patterns were observed globally.
Health advantages aside, cashless payments can be quick and convenient – that has boosted their adoption. Customers value seamless, frictionless transactions and businesses that put into action cashless payments can process payments faster and safely. This shift has been particularly strong in retail, restaurant and transportation where quick, contact-free payments are crucial for customer satisfaction.
Advancements in financial technology (fintech) have also sparked growth of online shopping and cashless transactions. Companies like PayPal, Square along with Stripe provide easy, secure methods for companies to accept digital payments. In most cases, these fintech solutions enabled small business owners to easily transition to internet sales and electronic transactions democratizing access to e-commerce platform. Also, “buy now, pay later” services like Afterpay and Klarna have opened up internet shopping for consumers and enhanced e-commerce.
The pandemic-induced shift toward e-commerce and cashless payments helped people and companies and has enhanced financial inclusion. Where conventional banking services aren’t accessible, mobile cash platforms and electronic wallets have opened up the economy to individuals outside these regions. Nations like Africa witnessed a rise in mobile payment products like M-Pesa throughout the pandemic that allowed huge numbers of people transact and obtain financial services from anywhere.
But the fast transition to e-commerce and cashless payments has also revealed several difficulties. Small companies with no infrastructure or resources to switch to online sales have struggled to contend with bigger, digitally native rivals. And the increasing usage of digital payments also raises data security and privacy concerns, with increasingly more cyberattacks and data breaches becoming commonplace. Additionally there are equity problems since not all consumers have the technology or internet connection to run a cashless economy.
Finally, the COVID 19 pandemic has accelerated the move toward e-commerce and cashless payments, fundamentally redefining how customers shop and companies operate. This particular transformation was motivated by necessity however it’s now crystal clear the convenience, effectiveness and safety offered by electronic commerce and contactless payments will go on to determine the future of retail and finance. As companies and individuals adopt these types of technologies, the long-term effects for worldwide commerce, financial inclusion, and innovation are considerable. Nevertheless, access, protection and competition challenges will all be essential to guarantee an equitable and viable new digital economy.