Florent schmahl spent three years trying to persuade his parents to move some of their business selling fruit and vegetables at farmers markets in the french alps online. after three weeks without any income when the pandemic forced all markets to close in march, jolle and jean-jacques schmahl were finally convinced.
The covid-19 outbreak has turbocharged several trends in global payments that had already been gathering pace, with more transactions than ever taking place online and a higher proportion of the remaining face-to-face purchases relying on card or contactless payments.
Six months into the crisis, mr schmahls parents are not expecting to go back to their pre-pandemic routine of travelling to four markets a week, and instead are looking to expand their online store to include more types of produce such as eggs and fish.
Us financial services company stripe started processing online payments for more than 100,000 new small businesses between march and june. now they and other payments groups are trying to convince more business owners such as the schmahls that the benefits of the digital shift outweigh any additional costs.
A third of retail sales in the uk took place online in may, compared with less than one in five in february. that huge jump is testament to the need for that movement to happen quickly and seamlessly at the start of the pandemic, said ellen moeller, emea head of partnerships at stripe.
But the more interesting question is how many will stay online? what we have been seeing so far as major lockdowns have eased up is a lot of businesses have stayed.
Changes have been similarly stark inside stores. tyl, a payments business launched by uk bank natwest last year, said 70 per cent of its new customers over the summer were new to card businesses that had previously relied on cash, compared with about 40 per cent before the pandemic.
Mike elliff, tyl chief executive, said recent measures such as the need for all bars and restaurants to provide table service would create further pressure for companies to update their payment methods. it should be more than just a way to get paid when someone does not want to use cash it should be something that can be a real competitive advantage for smes, helping them to run and grow their businesses.
Tyl has advertised itself to businesses with the promise of additional tools to track customer trends or operate customer loyalty schemes, as well as helping to cut costs associated with handling cash. online specialists such as stripe, meanwhile, push the benefits of opening local businesses up to swaths of potential new customers.
Selling online broadens the addressable market for these businesses in a pretty phenomenal way, ms moeller said.
The benefits, however, do not come for free, and regulators have warned that small businesses, in particular, have often been taken advantage of by payments groups.
Businesses pay a proportion of the value of each digital transaction to their merchant acquirer, which passes on some of the payment to card schemes such as visa and mastercard.
Physical stores also sometimes pay an additional fee to rent point-of-sale terminals, while many small businesses take online payments via platforms such as deliveroo for restaurants and shopify for ecommerce, which take a further cut of sales.
Eu legislation in 2015 put a cap on one element of merchants fees, cutting the average interchange fee across the continent from about 0.7 per cent of transaction value, to a maximum of 0.2 per cent for consumer debit cards and 0.3 per cent for credit cards.
However, a review by the uks payment systems regulator published this month found that small and midsized merchants got little or no pass-through of the [interchange fee] savings, unlike larger merchants such as supermarket chains.
Many also suffered by being tied into restrictive rental contracts for their point-of-sale terminals, while a lack of transparency made it hard to shop around for better deals.
The psr outlined high-level approaches it was considering to address the problems in the uk, but said it would require further detailed work to consider the most effective way to design and implement any remedies.
Despite the shortcomings in some areas of the market, charlotte hogg, chief executive of visa europe, said the number of small businesses adopting digital payments suggests they really do...see value in it.
A main factor, she added, was consumers see more value in it too. the shift in consumer expectations means even those businesses that are not as enthusiastic about digital payments may soon have little choice but to adapt. increasingly, we see evidence that what has happened is habit-forming [for consumers], which suggests it is going to stay with us, ms hogg said.