The world is going cashless. Recent trends are only accelerating the cashless march across the globe.
In the US, debit cards finally beat out cash as the top way to pay in 2018, according to a Federal Reserve survey. The mobile wallet M-Pesa is used by nearly 75 percent of Kenya’s adult population, while China’s central bank is planning to issue digital renminbi, in a country where even street food hawkers prefer mobile payments to cash.
But the biggest driver of cashless adoption is the COVID-19 pandemic. Within a short space of a few months, consumer attitudes and behaviour have shifted quickly as movement restriction orders, social distancing measures and heightened awareness over the benefits of digital payments and concerns about handling cash have resulted in consumers adopting new ways to pay and be paid.
In addition to the direct economic impacts, COVID-19 has sparked immediate changes in consumer buying behaviour and over the longer term, will amplify some of the challenges SMEs currently face.
According to a Visa study in March, the region saw a 36 percent increase in consumers shopping at e-commerce websites. Close to one fifth of people bought food and beverages online for the first time, and about half expected their online spend to increase in the following month. The stickiness of digital payments cannot be underestimated, as three quarters of respondents indicated a preference to continue paying digitally instead of going back to cash, even when the pandemic is over.
These changes can be daunting for SMEs, who may have adopted a ‘cash is king’ mentality over years of doing business. But SMEs need to adapt to digital-first experiences to cater to customers during the new normal.
Chavi Jafa, Head of Business Solutions, Asia Pacific at Visa said, “Visa is committed to supporting 10 million SMEs across Asia Pacific in the wake of COVID-19 and has introduced dedicated programs.”
Visa’s online resource centres provide tools, partner offers and information on how to start, run and grow a digital small business. Jafa explained, “For example, we launched a digital transformation guide for SMEs in Australia. Recognising the importance of partnerships, we are partnering eCommerce platforms such as Shopify and Boutir to help SMEs start selling online, while in Thailand we are partnering fintechs to help drive acceptance of digital payments on social media apps.”
Another challenge that Visa is helping SMEs to overcome is finding and retaining new customers. “With this in mind, we launched #WhereYouShopMatters campaign in Australia and New Zealand, which spotlights local SMEs and encourages consumers to support local. We will be expanding this initiative to other Asia Pacific markets such as Hong Kong, Malaysia, Philippines, Singapore and Vietnam,” Jafa further added.
With COVID-19 at the forefront of many customers’ minds, the face-to-face environment has also evolved with consumers opting for contactless technologies, both in terms of paying and authenticating a transaction. As markets slowly recover from the COVID-19 lockdowns imposed earlier in the year, customers are taking precautions to ensure a resurgence of infections doesn’t occur.
In fact, contactless is becoming a common way to pay in Asia Pacific, accounting for 41 percent of face-to-face Visa transactions in March. In markets like Australia, New Zealand, Singapore and Taiwan, tapping to pay makes up the majority of face-to-face Visa payment, at 70 percent and higher.
Jafa says, “Visa has worked with businesses to remove the need to capture signatures at the point-of-sale.” One of the key innovations involves a device we have with us at all times – smartphones. “We are thus piloting a new solution called Tap to Phone that provides SMEs with a cost-effective option to accept Visa contactless payments directly to their own Android/NFC-enabled smartphone without the need for a separate payment acceptance or terminal. Visa and our partners have launched this solution in Malaysia with more Asia Pacific markets such as Australia, Hong Kong, India, Taiwan and Vietnam to follow,” adds Jafa.
The New Payments Paradigm
Beyond just accepting customer payments, SMEs also need to navigate the new B2B payments paradigm.
Similar to how consumer behaviours are shifting in light of the pandemic, the same can be said in the B2B environment. Suppliers are looking to minimise cash transactions, and with movement restrictions in place, it’s harder for business owners to go to a bank to cash in a cheque. Businesses, especially SMEs, need the right tools to navigate this period of economic uncertainty.
Business credit cards can help with this. Just like an ordinary credit card, a business credit card can smooth the purchasing process. Jafa explains, “SMEs can pay with a Visa business credit card to help free up cashflow to manage their working capital effectively. Employers can also give Visa business cards to their employees for making purchase, instead of having them pay upfront and reimbursed later. This reduces administrative work and gives SMEs better control over business expenses.”
“Most SMEs are time-starved, and those who are adapting to new ways of working during the pandemic will be even more hard pressed for time. The simple act of reducing reconciliation, due to the data that gets captured via a Visa business card while gaining insights into spending can help boost productivity,” she adds.
 Kantar COVID-19 Barometer, fielded 27-31 March 2020, commissioned by Visa