COVID gives boost to digital transactions even as cash remains king

Lock-down gave consumers an introduction to digital transactions in a way that demonetization did not

The pandemic has provided a fresh boost to the digital economy with contact less payments turning out to be an alternative that averts the risk of infection, even though cash remained the most preferred mode of transaction.

Digital payments generate data about consumer behavior which businesses can analyse to derive insights for crafting coping strategies.

When people started stocking essentials like groceries and went easy on frills as they prepared for long stays at home during the lock-down, HEMA, a Dutch variety store, faced a situation it had never anticipated in its nearly 100 years of existence. It seemed obvious that larger stores would help serve most of the people, but insights derived from the analysis of retail spending patterns did not support that obvious conclusion. It showed that people were frequenting smaller stores in their neighborhoods than the larger and more distant ones. So HEMA decided to keep these stores open. This would also help the elderly and the vulnerable to shop safely while closing the stores early allowed the staff to restock.

London’s Chief Digital Officer tapped similar insights when he wanted to get a nuanced understanding of the economic impact of the pandemic on the city to enable the government to disburse aid efficiently, direct investment to support those who were most affected and plan the budget better. London does a comprehensive economic survey once every three years, but card and cheque payment data provided reliable insights every few days. In India, the Reserve Bank of India governor urged the consumers just before the lockdown to begin using mobile banking and cards in order to avoid contact with coins and currency notes and visits to crowded places to withdraw cash.

In a survey of 4,800 consumers and 950 executives from 12 countries including India by Capgemini Research Institute, 82 per cent of Indian respondents said they had made use of touch-less interactions during the lock-down and 48 per cent of them expected to continue doing so after the reopening. The lock-down gave consumers an introduction to digital transactions in a way that demonetization of 86 per cent of India’s currency in November 2016 did not.

Source