The Week In Payments: The Visible Perils And Hidden Promise Of The Coronavirus

It almost never happens that a week in payments is dominated by a single story. In an active and competitive series of interconnected ecosystems, there is typically no shortage of big news going around.

There is usually a lot to write about, newswise.

But when the history of early 2020 is written someday, it will doubtless not be logged for how “typical” it was – particularly the last seven days or so, when COVID-19 went from being the biggest story in the world to more or less the only story in the world, at least as far as the economy was concerned.

In short: Workers are going home to log in remotely, consumers are hunkering down (in some places by legal mandate), schools are on hiatus, the stock market has been a roller coaster with many more drops than climbs, there is no toilet paper to be had for love or money, and an atmosphere of deep uncertainty pervades nearly every aspect of American life.

Everyone has the same question these days: What’s next?

And while we don’t claim to have all the answers, for this special COVID-19-focused edition of The Week In Payments, Karen Webster sat down with Tipalti’s Co-founder and CEO Chen Amit to talk through what’s happening, what’s coming and who the winners and losers are likely to be.

The Uneven Gig Economy Experience 

Workers of all kinds are experiencing a high anxiety period – something PYMNTS uncovered in its recent survey, which found that 85 percent of U.S. consumers are concerned on some level about the virus, with more than a third of them (37 percent) reporting they were extremely concerned. Nearly half of consumers (49 percent) said they were somewhat or slightly concerned.

Concerns ran demonstrably highest with older millennials, 44 percent of whom reported being extremely concerned, and lower-income workers, who have sharply curtailed their spending.

Concerns have also run particularly high among gig economy workers, Amit noted, particularly those working in the physical world like Uber drivers, who have seen demand for their services drop sharply.

But the situation is complicated, he explained, because the term “gig worker” describes such a wide range of employment modes. For those who are employed in creating digital products and services – Twitch streamers, YouTube personalities, Twitter publishers, eCommerce merchants – much of what is going on right now in the economy is “business as usual” for them.

“When we have analyzed how our customer base would be affected by the current situation, the majority are less impacted by what is happening now, or not negatively impacted in the same way as some in the physical world,” Amit said. “In some cases, as more people are logging on, online and digital-first firms may see an increase in their business.”

Digital-first businesses coming out ahead, and possibly even better off than before, is a thread that might very well run through the economic recovery from COVID-19 and the various pain points it has exposed. But to build on those opportunities, the market has a bigger job to do: re-instilling calm.

Pushing Back on Panic With Communication 

Fear does unfortunate things to consumer psychology. Sometimes, those effects are annoying and mildly comical – like the toilet paper hoarders who have emptied shelves and purchased by the car load. But sometimes it’s more disturbing – like the ATM runs and cash hoarding popping up in cities. Bank of America and JPMorgan Chase branches in New York City have temporarily reported running out of $100 bills, as consumers watching a tanking stock market began pulling out large withdrawals.

In the meantime, many big players – Facebook, Apple, Grubhub, Ford and others – have moved to inject calm into the system via loanspayment holidays for March, waived fees and the like, Webster noted – but those confidence builders are offset by things like JPMC’s announcement that they will be closing some branches in an attempt to aid containment efforts. Can consumers be persuaded to stop acting like it’s the end of the world, Webster wondered, while businesses’ strong and serious reactions make them feel like it’s the end of the world?

It is a complicated balance to strike, Amit told Webster, because the situation is serious, and it will require changes and adjustments. Tipalti, he noted, has experience with that at a small scale in-house: They’ve slowed their hiring plans for the early part of the year, they’ve refocused their efforts on their existing client base and have structured their operations so their firm can profitably grow for the next few years without an injection of outside funds.

What’s necessary, said Amit, is to manage communications. Consumers can handle branch closures and can handle staying in, but uncertainty breeds a tendency to imagine the worst and then gear preparations toward it. Information mitigates that urge to panic.

“For most of the economy, we are seeing that it’s really the uncertainty that is breeding the actions people are taking,” said Amit.

The Other Side 

For all the inconvenience and genuine hardship the epidemic has created in the U.S. and around the world, it will likely be remembered as the turning point moment when it comes to making the big turn to digital, Amit predicted – particularly when it moving payments from an analog to a digital world.

The beacon has gone up – and for gig workers and vendors, the time to kill the paper was officially the day before this began taking shape.

“I think what we're going through now will expose many companies, many leaders, to the challenges in working from home if they are not using the right tools and the right automation, whether it’s in accounts payable or in other workflows,” Amit pointed out. “And I think the desire to automate and streamline those flows, and make them less dependent on human interaction, is about to be more accurate than ever.”

The fact that it’s happening everywhere to everyone all at once, he noted, is clearly not optimal. But when it is over – and it will eventually be over – what will survive and thrive are the digital-first models that move data and money seamlessly between online and offline environments, on-demand as needed.

Yesterday, it was a “nice to have.” Tomorrow, it will be a “need to have.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.