The great digital migration: 78% of consumers are changing payment methods

Visa’s Back to Business global study reveals small businesses and consumers, from around the world, that may initially been reluctant to adopt digital technology are now embracing it. But will this digital landscape remain in place for the future?

There’s a lot of talk, and a lot of percentages, being thrown around about how so many consumers are going digital and how so many small businesses are changing payment methods and a global study by Visa backs up the anecdotal information with research data.

The verdict: a portion of consumers and small businesses once reluctant to go digital prior to the pandemic have not only changed their payment methods, but are looking to continue the exploration of mobile and contactless payments moving forward.

Visa’s Back to Business study

The Back to Business study assessed the shift to digital commerce for consumers and small business, according to a press release. Conducted in the U.S., Brazil, Canada, Germany, Hong Kong, Ireland, Singapore and UAE, the study was directed by Wakefield Research between June 18 and June 29. For the study, 250 small business owners at companies with 100 employees were surveyed. For the consumer portion, Wakefield Research surveyed 1,000 adults age 18+ in the U.S., and 500 adults ages 18 and older in Brazil, Canada, Germany, Hong Kong, Ireland, Singapore and UAE. The data was weighted to ensure an accurate representation of adults ages 18 or oder in each market.

Throughout the height of the pandemic, consumers had expectations for a safe and ‘touchless’ payment experience, which was evident from the accelerated adoption of contactless payments and e-commerce. The study uncovered data that emphasized the importance of small business recovery efforts, and how consumers are adjusting.

According to the eight-market study of both consumers and SMBs, nearly eight-in-10 consumers worldwide (78%) have changed how they pay in order to reduce contact. For small businesses, more than two-thirds of SMBs (67%) have tried a new approach from launching an e-commerce site or changing POS technology, to keep their business on track.

“Consumers are putting COVID-19 safety measures at the top of their shopping lists and rewarding businesses that do the same,” Suzan Kereere, global head of merchant sales and acquiring, Visa, said in the release. “Historically, we see behavior change at the point of sale as a gradual shift over time. But, COVID-19 has created an immediate need for safer, more efficient shopping experiences both on and offline and consumers are responding by rapidly migrating to digital commerce. We want small businesses to know that Visa is here to help them navigate these new consumer needs and expectations, which will make their businesses stronger now and in the long run.”

The new expectation: Make it digital, make it safe

There’s an old saying about the difference of giving someone a fish to temporarily satisfy their hunger or teaching them to fish so they will never be hungry again, which is essentially what the pandemic has done for the consumer and small business owner. It taught them if they wanted to survive, they needed to change.

The pandemic forced new thinking, innovative ideas and even collaboration. Without such a global issue as the COVID-19 pandemic, would businesses have made the digital shift and would customers focus so intently on safety and health?

In each market Visa surveyed contactless payments are a driving differentiator. Nearly two-thirds (63%) of consumers would switch to a new business that installed contactless payment options. For close to half of global consumers (46%), using contactless payment methods is among the most important safety measures for stores to follow. Nearly half (48%) would not shop at a store that only offers payment methods that require contact with a cashier or a shared device.

Nearly four in five (78%) consumers have made changes to the way they pay, including shopping online when possible (49%), using contactless payments (48%) and not using cash as much (46%). A majority (70%) of consumers have used a new shopping or payment method for the first time, including 26% who have used tap to pay for in-store purchases, shopping for groceries or household items online (34%), curbside restaurant pick-up (28%) and buying online then picking up in store (25%).

Small businesses are optimistic

Despite the unpredictable nature of the pandemic, 75% of SMBs are optimistic about the future. Additionally, 71% of global SMB owners say they have received support from their local communities, with the most coming in the form of business referrals (33%) and favorable reviews (31%). An area for improvement: where consumers shop, as just 9% of consumers say they shop exclusively at locally owned businesses, whereas 15% shop exclusively at larger retailers, with a large mix of combined approaches falling in between these two extremes.

Globally, SMB owners estimate at least six to 10 more challenging months before their business is fully operational. Their greatest immediate concerns include revenue declines (52%), attracting new customers (46%) and having to reduce wages or salaries (22%).

More than a quarter of SMBs (28%) have tried targeted advertising on social media or sold products or services online (27%). Another 20% have adopted contactless payments. One-third (33%) of SMBs report they have accepted less, or stopped accepting, cash since COVID-19. Millennial SMB owners (41%) are significantly more likely to have accepted less or stopped accepting cash, compared to Gen X (31%) and Boomers (21%).

More than half (53%) of SMBs are likely to purchase a fraud management solution to help protect their business due to the shift to digital commerce.

In the United Arab Emirates (UAE), 44% of SMBs, compared to 20% globally, have enabled contactless payments for the first time since the start of COVID-19. Nearly 94% of UAE SMBs have changed or launched new efforts to keep their business on track, compared to 67% globally. SMBs in Brazil (84%) and Hong Kong (87%) also are trying new approaches in large numbers, including selling online (50% in Brazil compared to 27% globally).

Keep it clean if you want to stay in business

Two-thirds (67%) of consumers said they are taking some measure to keep their payment cards clean, with 33% stated they disinfect them. An overwhelming majority of UAE (89%) and Brazilian (87%) consumers are taking some measures to keep their cards clean, whereas Singaporean (50%), German (53%), Canadian (60%) and Hong Kong (65%) consumers fell below the global average.

This is a new era for both the consumer and the business. How each group chooses to move forward will dictate the future. And from the research it seems the future holds a world of digital possibilities.