4 Ways COVID-19 Will Change Credit Card Processing — and What Merchants Can Do About Them

The coronavirus has disrupted literally every industry on the planet, including payment processing. The dust has yet to settle, but it’s worth looking into the changes that merchants can expect from credit card networks, merchant services providers, and consumers. 

Below, we shed light on 4 ways that COVID-19 will change the payment processing landscape. 

Have a look below and keep these insights in mind when determining where to take your business going forward. 

More leeway from credit card networks and payment processors

The vast majority of businesses (SMBs in particular) are struggling, and many companies are unsure of their survival. The Atlantic cites a survey, which found that only 30% of small businesses —  including retailers, hospitality, tourism companies, and restaurants — expect to survive a lockdown that lasts 4 months. 

Those are pretty dire results, and players in the payments space recognize this. 

As such, many are offering leeway to help merchants weather the storm. 

Visa and Mastercard have delayed fee changes

Let’s start with the fact that Visa and Mastercard have postponed the changes to their interchange fees to July instead of April. 

Nathan Grant, a senior credit analyst at Credit Card Insider, points out that “both companies have also said that they are committing millions to help small businesses during the crisis”.

What this means for you: Keep yourself updated with how these changes are affecting your business and see if you can take advantage of ways to save money or gain funding. 

Nathan’s advice? “Keep in touch with your banks to stay ahead of the curve on any changes that may come down the line.”

Lower interest rates from card issuers

If you’re using credit cards in your business, you may be able to avail lower interest rates, says William Taylor, a career development manager at VelvetJobs.

“As the coronavirus pandemic spreads, credit card issuers are stepping in to give customers resources during this unprecedented crisis. In this time of need, many credit card issuers are moving quickly to assist their customers by providing them with information and resources that may alleviate some of their financial burdens.”

What this means for you: According to William, you should see if your bank or credit card issuer will allow you to skip a payment or waive interest. 

If this isn’t possible, discuss the possibility of having lower interest rates.

“You might qualify for a better rate if your credit has improved since you applied for the card, or the issuer might be open to changing your rate,” he adds.

The death of cash

Cash has been on the decline for years, and the coronavirus could be just the thing that puts the final nail in the coffin. 

“I think merchants can expect to process more card payments permanently going forward as a share of total revenue,” says Ian Wright, founder of Merchant Machine.

What this means for you:  According to Ian the shift away from cash payments “will likely mean higher total fees since you’ll be paying fees on transactions that used to be done in cash before”.

This may not be the best news if you’re trying to lower costs, but bear in mind that you’re leaving more money on the table by not accepting credit cards.

And don’t forget that you can always find ways to lower your rates with the right merchant provider.

Contactless payments will accelerate

Contactless payments, which power things like tap-and-go and mobile payments, have been making inroads for some time now. But with COVID-19, we can expect the adoption of these technologies to accelerate.

With people keeping their distance and consumers being wary of touching too many surfaces, many will opt for ways that don’t involve physical contact. 

“Card processing will become even easier, with contactless transactions becoming even more popular in order to pay efficiently and without the need of human contact when using cash transactions,” shares Ethan Taub, CEO of Goalry.

“Credit card network policies will become more lenient on the amount we spend using contactless transactions with the limits reaching $500-$1000.”

That said, Ethan says that the rise of contactless will prompt additional security measures. 

“With this also comes the question of security. How we can ensure that we keep safe when travelling, shopping and spending our money? Banks may look to introduce fingerprint or other biometric security measures to ensure that we and our money stay protected.”

What this means for you: If you haven’t done so yet, start giving your shoppers “contactless” options to pay. It’s high time to upgrade your payment terminals so you can process tap-and-go credit cards, as well as Apple Pay and Samsung Pay.

SMBs will move to online processors

With social distancing and lockdown orders being enforced, consumers are increasingly turning to ecommerce. 

As such, SMBs are finding ways to serve shoppers online.

“More and more small-to-medium sized businesses are moving to online processors who might not have offered it before to keep their businesses afloat,” says Nathan. 

What this means for you: According to him, “if your company is an SMB that is making the move to more online or mobile credit card processing, make sure to understand the various fees involved”.

“Some credit card processing fees are fixed, like monthly network fees and authorization costs, but be sure to familiarize yourself with the variable fees the most, such as interchange fees between your bank and the customer’s bank, discount rates, and tiered plans that can charge different fees based on how a credit card transaction is processed and the type of card used.”

If you have questions or concerns about your current merchant account or how to transition your business to meet the needs during these times, click here to book a call. At Nation Merchant Advisors we'll guide you to the most efficient, cost saving solution.

Credit: Payment Depot