This time it’s for everyone.
The Covid-19 pandemic has changed the way the world does business. It has accelerated the global shift away from cash transactions and towards digital. And as big merchants sped up their transitions during the slowdown, many smaller merchants had to adapt in an attempt to try and keep up.
Recent research conducted by Visa found that during the pandemic 43 percent of small merchants started selling products and services online for the first time, and 39 percent of them began accepting contactless payments, found the Visa Back to Business Study 2021.
Like many other financial players, Visa has a role to play in ensuring this transition goes as smoothly and productively as possible for businesses both small and large. Visa and our merchant partners across the region are seeing evidence of this trend daily and together we are working hard to create new and useful products that consumers will find convenient, secure and safe to use.
I believe this shared spirit of innovation, which persisted even during the toughest of times, will bear fruit and help businesses to recover from the financial repercussions posed by the Covid-19 pandemic.
The stakes are sky-high, and three statistics from research by Visa show the underlying challenge for merchants, and especially smaller merchants:
• Fully 53 percent of CEMEA consumers who shop for groceries online made their first online order during the pandemic and 49 percent made their first online pharmacy order (as per the Visa Covid Impact Tracker in CEMEA 2020, Wave 3).
• In the Middle East and North Africa (MENA) alone, contactless payments went from 51 percent of all face-to-face Visa transactions in December 2019 to 78 percent a year later (Visa Back to Business Study 2021).
• And yet 59 percent of small merchants considered themselves less than proficient with new forms of technology (Visa Back to Business Study 2021).
The user and merchant journeys are changing dramatically, and to gain a deeper understanding of the trends impacting merchants today, we at Visa have divided it into five categories: buying, selling, moving, grooving and living.
In each category we have worked with merchants to find innovative solutions, and I believe these case studies will prove to be most instructive:
Buying: Portmone is a payment service in the Ukraine that wanted consumers to feel more comfortable with cashless transactions. Together we came up with a solution at Visa’s Innovation Centre in Dubai that builds trust by making the payment process more user-friendly.
It works like this: A customer orders three pairs of shoes. Funds are temporarily blocked on his Visa account (like when you check into a hotel). When the shoes are delivered, the customer decides whether to accept all or some. After he confirms delivery of the desired shoes, his phone receives a link that he follows to confirm receipt, or a QR code that the courier scans. At that point the payment is made. The buyer immediately sees the total cost of the shoes including delivery.
In our pilot project, this safe-delivery system increased the volume of cashless sales for all merchants who took part – in one case lifting volume by 86 percent.
Selling: Paga is a mobile money wallet in Nigeria where the solution focussed on merchants more than consumers. When we spoke to merchants across the country in late 2020, they said the cost and complexity of digital payment scared them; they were comfortable with their cash register.
The solution – with Samsung as a third partner in the process – was to provide the merchants with cellphones that came loaded with a sales app with a very-simple user interface.
The merchants paid for the phone on an instalment plan that they could cover with a slice of their sales.
The app also comes with a variety of value-added services, from digital payroll to inventory management, that will allow small merchants to effectively grow their business.
Moving: Prior to the pandemic, we have always worked closely with Etihad Guest to find new ways for their members to earn and spend Etihad Guest Miles on their everyday transactions. During the pandemic, given travel was at a near standstill, airlines wanted to maintain their connection with members.
For Etihad Guest, this meant developing an innovative app which provides Etihad Guest members with an instantaneous and rewarding shopping experience. So, we at Visa helped the airline launch the Etihad Guest app, through which – in a regional first – their members can register their Etihad Guest Visa cards to the Etihad Guest app and use the card to earn miles or pay for goods using miles, wherever Visa is accepted in the UAE. Within less than a year, the app has been recognised by the Stevie Awards as the best ‘Innovation and general utility app’ of 2021.
Kim Hardaker, Head of Etihad Loyalty and Partnership said: “In 2020 Visa supported us with the development of our ‘Miles on the Go’ platform, that allows our members to earn and redeem miles on the go with our partners such as Aldar, Miral and Farfetch.com. Following the launch members have earned over 22 million miles and have redeemed over 18 million miles. The results exceeded our expectations which tells us it’s something members were looking for.”
Grooving: Let’s go global for this category. Entertainment venues are reopening in many countries, but cash is not on the guestlist. At the Super Bowl in Florida this February, Visa and the National Football League ensured that all payments inside the stadium were cashless. Fans arriving with cash were presented with the possibility of converting their paper currency to a prepaid Visa card at dedicated ATMs, at no additional cost.
Living: Digital transformation is not just about sales, but about the entire business. Last year Visa partnered with the region’s first super app, Careem, to allow drivers to have immediate access to their earnings by pulling funds from their Careem account to their Visa cards. As cash usage fell across the CEMEA region during the pandemic, it became harder for some workers to get quick access to their earnings. And so digital solutions such as this one were embraced.
At Visa, we believe the unprecedented transformation towards cashless payments will last well beyond the pandemic. It is not a case of customers wanting something that merchants are not feasibly able to provide, or of merchants trying to foist something on reluctant customers; this is a case where all parties, responding to the same powerful phenomenon, are pointing in the same direction.
Perhaps this is why, even though change can be scary, 82 percent of small merchants told Visa that they feel optimistic about the future of their business. Because this time, it’s happening for everyone.