How did the COVID-19 pandemic impact the payments industry and Payvision in particular?
There are several industries that have been seriously and negatively impacted by the pandemic, from travel and hospitality to high street retail, fitness, and sports industries – to name a few. Travel via the London Underground service, for example, dropped by a staggering 92% in April, and IATA says that the airline industry could lose up to USD 84 billion, with carriers reporting a drop in traffic of up to 90%.
These seismic shocks have had a great impact over our industry, and the shape of consumer payments has changed dramatically as the broader business consequences ripple through to the payments ecosystem. Mastercard reports a 40% increase in contactless payments, and cash payments have decreased as consumers turned to more hygienic payment methods. Mobile and omnichannel payments have also increased, as has ecommerce in general. Some of the numbers are eye-watering – like Amazon hiring 175,000 extra staff members to handle the workload. Many merchants will struggle, however, along with retailers who can’t keep up with current tech curves.
For me, the Payvision impact really kicked in on Saturday, 7 March, in the early evening. A significant part of our IT operations is located in Madrid, and I got a call from our VP who heads up that office. He told me that there had been a COVID-19 case near us on the campus. Right then and there, we decided to close the office immediately and ask all staff members to work from home. Seven days later, Spain went into one of the strictest lockdowns ever seen. Soon after Madrid, we closed our offices in other parts of the world as well, including our HQ in Amsterdam.
In terms of the Payvision business, it is clear that consumers have made their choice, as they are shopping more online – and that is irreversible. Therefore, we see this trend reflected in our clients’ businesses. I believe we’ve all been rather fortunate in our choice of industry.
What are the main challenges for the payments and tech space that derive from this turn of events?
I like the way that Satya Nadella, Microsoft CEO, puts it, as he talks about three phases of the pandemic:
- the response phase – we’ve swiftly completed this phase and adjusted to the initial impact;
- the recovery phase – that’s where we are now, cautiously opening up offices with all the new hygiene and social distancing rules as well as travel restrictions;
- the re-imagine phase – we’re looking at ways to reinvent how we work, travel, play, and pay.
Although phase three is a long-term endeavour, we need to think about it today. In the short term, we face the challenges specific to the changing shape of many industries. For payments, phase three is about being even more agile and creative than we were as an industry before. It’s about adapting to the changes in consumer behaviour and the power-shift that has gone into overdrive towards online banking, real-time payments, and cashless societies.
When it comes to mass working-from-home, we all face a few challenges. Working from home is great in principle and fine as an emergency measure, but a kitchen table and chair do not offer sustainable ergonomics, let alone compliance to health and safety regulations as well as insurance issues. In any case, the future working setup will not look as it used to before the pandemic, and companies will have to be very strategic and attentive in choosing the right options for the organisations and their staff.
How do you see the entire tech industry responding to these challenges?
Impressively, I reckon. Can you imagine what this would have been like ten years ago, before the collaborative working platforms and the Cloud took off? Zoom is, of course, the much-acclaimed champion, but all the cloud suppliers have done really well in providing the scalability the world needed. I think Microsoft has done particularly well in scaling up its Teams services.
The future of the tech industry as a whole is a big question, and there will be winners and losers. The pandemic has accelerated Cloud adoption all across the board and, perhaps more importantly, it has increased top management awareness for digital transformation. Therefore, the major cloud players will undoubtedly do well. At the other end of the spectrum, we’ve seen less (VC and PE) funding available for startups and that will impact innovation in our speed-led sector.
Due to many new-economy changes, the tech industry will lead the way in remote-working and distributed-working. Our internal research conducted at the beginning of June reveals that our findings are aligned with those of other companies and shows that most people would prefer to work from home – at least some of the time, yet more than before. And we see big tech already downsizing their requirements for downtown office blocks.
How did you adapt to the ‘new normal’ and how do you support your customers in the aftermath of the COVID-19 pandemic?
We had asked the ‘what if’ questions as part of our regular business scenario planning. At the time, we thought the worst-case scenario would be a catastrophic fire, a terrorist event, or a natural disaster taking out one or more offices. Consequently, we based our business continuity planning around those scenarios, and we had all the basic infrastructure and services in place to support remote working.
The process worked really well for us, and Payvision folks across the globe adapted quickly to working from home. Therefore, our customers should not have experienced any direct service issues. We’re also working with customers to better understand what’s going on and how we can better serve them in adapting to the changes and what McKinsey calls the ‘next normal’.
Do you see the payments space returning to the ‘old normal’ anytime soon or rather advancing even further towards this ‘new normal’?
The ‘old normal’ is done. The planet has gone into fast-forward mode in recent months. It may slow and slip back into some old habits, but the changes are largely irreversible in many sectors. We’ll probably return to some kind of office working post-COVID-19, but working from home is here to stay, at least to some extent.
As we shop more online, pay more with our phones, watches, and wearables, and share our data more easily with ‘COVID-19 apps’ and government bodies, our sense of privacy has also shifted – and it will take another crisis to shift it back.
Real estate agents are also reporting (at least in the Netherlands) a shift in preferences to houses outside the bigger cities, with more space, for fewer euros – and a house is a long-term investment, a signal of long-term change that will be reflected in how we work, play, and pay. Surprisingly, WeWork is forecasting profits in 2021, as customers seek more flexible office spaces, triggered by the pandemic. Their new signings include the predictable set of big tech names.
Overall, re-imagining the way we do things will be an awesome opportunity for all of us.
About Christopher Martlew
Chris is CTO at Payvision. He has been in the payments industry since 2008. Chris holds an MBA from London Kingston University and is author of Changing the Mind of the Organization – Building Agile Teams.
Payvision is a global payment processor that is driven by a passion for technology and simplifying payments. With one single, secure platform, we power transactions for businesses across the globe. We know our way around the latest techniques in artificial intelligence, omnichannel strategies, and fraud prevention. The dedication to our clients shows – this is where we truly make a difference. By enabling an intuitive and flawless customer experience on all channels, we bring a unique beat to payments.