Adopting Digital Payments and Remote Banking in the Time of COVID-19

Adopting Digital Payments and Remote Banking in the Time of COVID-19

Srinivas Nidugondi

Senior VP & COO, Mobile Financial Solutions at Comviva

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Adopting Digital Payments and Remote Banking in the Time of COVID-19

22.04.2020 03:00 pm

From train seats to city roads, deep cleaning and sanitization has certainly taken on a whole new meaning in these uncertain times marred by Coronavirus! So much so, in fact, that even cash isn’t spared these necessary measures. An interesting example in this regard is China-the epicenter of the COVID-19 virus. As per reports, in mid of February 2020, the government had ordered banks to withdraw potentially infected cash from the markets and disinfect it using ultraviolet or heat treatment, store it for seven to 14 days and then re-issue the same in the market. Unsurprisingly, South Korea has followed suit, with country’s central bank quarantining currency notes for two weeks and also putting them through a high-heat “laundering” process, before releasing them for circulation.

Pushing Remote Banking and Digital Payments

While useful, of course, these examples may not find much footing in other parts of the globe. Instead, many governments, global bodies, banks and financial service providers are pushing digital, contactless payments and remote banking to the fore. In India, for instance, the Reserve Bank of India (RBI), the National Payment Corporation of India (NPCI) and the government have combined forces. These entities are emphasizing on using digital payments methods like UPI and IMPS to minimize social contact and crowding of banks or bill payment points. To drive home the point, campaigns like #paySafeIndia and #IndiaPaySafe #IndiaSatySafe have been launched to promote digital payments. In an official statement, RBI said “On-cash digital payment options (like NEFT, IMPS, UPI and BBPS) are available round the clock to facilitate fund transfers, purchase of goods / services, payment of bills, etc. In the context of the efforts to limit the fallout of the corona virus pandemic by avoiding social contact and visit to public places, public can use these modes of digital payment from the convenience of their homes through online channels like mobile banking, internet banking, cards, etc. and avoid using cash which may require going to crowded places for sending money or paying bills.”

 Let’s not forget, though, India is certainly no stranger to digital payments. These payments have, in fact, witnessed rapid growth over the last few years, particularly UPI transactions. In December 2019, UPI registered 1.3 billion transactions and the aim is to take it to over 1 billion per day.

In the US, major banks are encouraging their customers to use bank’s mobile app and internet banking service to avoid crowding at bank branches and ensure social distancing. The aim is to deliver essential services with reduced staff while ensuring safety and well-being of customers and employees. To spread the word, banks like Chase have taken to social media sites like Twitter, while U.S. Bank has created a special COVID-19 information page.

Encouraging Use of Mobile Money in Africa

 Like its peers, Africa, too, is taking the threat of COVID-19 very seriously. As a safeguard, mobile money has been called into service, to address this challenge. In Kenya, Ghana, Uganda and Rwanda, mobile money providers have enforced a slew of customer-friendly measures. From waiving off service charges on selected financial transactions to increased daily and monthly transaction limit, the customer is truly in the spotlight. Not just this, but the Bank of Ghana, the country’s central bank is going to relax existing Know Your Customer (KYC) regulations. This is aimed at enabling more people to adopt and use mobile money in time of this health crisis. In Kenya, a majority of churches have suspended Sunday service and directed members to stay at home and pay their tithes and offerings through mobile money services. Jumia, one of the biggest online retailers in Kenya, has stopped use of ‘Cash on Delivery’ amid rising shopping of essential products directly delivered to home. Jumia is asking clients to pay upfront or make payments via digital platforms like mobile money on time on delivery.

Supporting the Low Income Population and Small and Medium Businesses

Of course, global preventive measures, such as the “lockdown” has a significantly adverse economic impact on an individual’s earning, especially farmers, low income daily wagers, small and medium businesses, women, poor senior citizens, widows and disabled people. To counter this, governments are providing financial support. For example, In India around 200 million women will get INR 500 per month for three months, farmers will get INR 2000 in three equal installments, while poor senior citizens, widows and disabled will get a one-time financial support of INR 1,000. India’s largest state by population, Uttar Pradesh is giving INR 1,000 to two million registered labourers and 1.5 million thela (kiosk) and rickshaw pullers. The money will, needless to say, be paid digitally through their bank accounts via the Direct Benefit Transfer (DBT). This initiative is, of course, aided and abetted by the Jan Dhan low-frill bank accounts created by the government. To say that this robust financial inclusion infrastructure is now coming in handy to provide emergency funds to low income people is certainly an understatement!

Globally as well, small and medium sized businesses (SMBs) are facing the brunt of the pandemic. To help SMBs, banks in the US to China are waiving off fees, deferring loan repayments and providing low income loans. In China, the state-council has ordered large state-owned banks to increase lending to small businesses by 30 per cent in the first half of 2020. The official interest rate set by the central bank for commercial lenders providing credit to small business, rural areas, farms and agriculture firms has been set at 2.5 per cent. This will be ensured by the recent spurt growth in online banks and digital finance in China, naturally.

Conclusion

While norms pertaining to long “work-from-home” and self-isolation have certainly gained global attention, the pandemic has given rise to other interesting factors as well. Notably in the banking and payment industries, of course. After all, the paradigm is shifting to remote banking, digital payments, and direct financial aid. Will this be the ‘Black Swan’ moment pushing financial industry to become more digital? Only time will tell.

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