fbpx

April 15, 2020Blog Posts

How can the companies that help us pay for goods survive a coronavirus shutdown?

MarketWatch

As the COVID-19 outbreak curtails consumer spending, some younger payment-processing companies are getting creative, while the stalwarts are betting their resilient business models can withstand the latest economic downturn.

PayPal Holdings Inc. and Square Inc. are among a handful of financial-technology companies that have been approved to distribute small-business loans through their platforms as part of the Paycheck Protection Program, as well as to help disburse stimulus payments to individuals.

Despite new opportunities like those, there are still concerns about how the payments industry will fare as the COVID-19 crisis shakes the global economy.

Because payments companies touch so many aspects of the economy, it’s unclear when their businesses could return to normal. No one knows how long or how deep a coronavirus-driven recession would last, which could pressure spending until consumers feel more certain about the economic landscape. Some areas, like travel, may be especially stubborn until a vaccine becomes widely available.

Of course, e-commerce is far more prevalent now than it was a decade ago, giving payment providers a bit of a cushion even as surging unemployment and general unease about the economy prove tougher hurdles to spending. Analysts say PayPal, which conducts nearly all of its business online, could withstand COVID-19 better than most.

While the major players are likely to feel the sting now, a heightened awareness of germ spread could help ultimately accelerate plans by Visa and Mastercard to grow adoption of contactless payments in the U.S.

Source

  • Share this post: