NAFCU Services Blog

Dec 18, 2020

Payments Trends In The Age of Coronavirus

By Bill Hampton | Division Executive, Credit Union Division | FIS

Payments and payment processes have been significantly affected by the coronavirus pandemic. The trends in spending and the payment methods used during these challenging economic times are both surprising in some respects yet familiar in others.

In similarities, the shifts we’ve seen in overall card spending are not too different from how things played out during the 2008 recession and housing crisis. Spending was down, and any cash spending switched over to debit cards for items like groceries and outstanding debts.

In differences, areas aside from essentials have experienced a large increase in spending, such as home improvement. So many people were stuck at home due to the coronavirus-induced lockdowns, prompting more redesigns and home-improvement projects. Other spending areas that have seen big increases are gaming and streaming services. Even restaurants and dining are beginning to make a comeback.

One other new trend is an increase in debit card payments for rental cars, which has seen incredible double-digit growth since June. Ride sharing and public transportation are less desirable during a pandemic, so those who don’t own cars are looking for new alternatives to get around town when they must.

Of course, with so many people out of work during this crisis, unemployment benefits and stimulus checks have been the only sources of income upon which some can rely. In fact, stimulus money is one of the main ways consumers have been paying off outstanding balances. As the economy starts to recover, it is the hope that consumers will get ahead of deferment and move on from stimulus. Many challenges still lay ahead to get to that place, specifically fraud prevention and mitigation.

Looking to the future, increased integration of new technologies and AI is sure to make payment processes faster and easier. Contactless payment systems are being adopted by many major retailers all over the country, but the United States is still far behind the rest of the world when it comes to widespread implementation. While we do have contactless cards, plenty of Americans still have to insert the card into the reader and press buttons on a keypad. As we continue fighting the spread of the coronavirus, a device that can easily spread germs is unfavorable.

The coronavirus pandemic and resulting economic fallout have changed payments and related trends in a matter of months, accelerating technological investment and evolution. As we move forward, credit unions can leverage technologies and solutions to pave a more secure and reliable future for members

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