COVID-19 Impact on e-Commerce & Online Payments

2020, as a result of the COVID-19 pandemic, has marked a watershed moment in the digital and e-commerce world, prompting the need to adopt online methods of payment for most businesses. People were forced to look for alternative payment methods during the lockdown to obtain their necessities.

According to the United Nations Conference on Trade and Development (UNCTAD), e-commerce’s share of global retail trade rose from 14% in 2019 to about 17% in 2020. This growth will likely continue through an unpredictable recovery that has seen many false dawns. Although countries like the US, Canada, and the UK are making great progress with vaccinations, recent spikes in infections and slow global distribution of vaccines means that e-commerce and online payment trends are set to continue.

Vaccination is still lagging globally, particularly in developing countries, but the UNCTAD points to accelerated growth in e-commerce in regions like Latin America, where daily trade on its online marketplace Mercado Libre has doubled, and Africa, where Jumia’s sales have increased by 50% in the first six months of 2020. Similar trends have been recorded in China, Asia Pacific, and other places, but it’s the systems that are currently being constructed that will generate the most growth in the future.

Innovations in online payments and physical delivery, coupled with inclusive deployment are some of the crucial areas that need to be targeted to grow global online trade. The billions of dollars that have been made by top e-commerce giants like Amazon are proof that the systems in place can work. The challenge going forward is how to improve them so they work for small-scale retailers, consumers in less connected parts of the world, and for B2B online trade.

The pandemic has pushed many small businesses online for the first time and they’ve become an important part of the surge that has been witnessed during the pandemic. For these businesses establishing an online presence, accepting payments, receiving components, and shipping their products means a complete overhaul of the way they do business. These SMEs also have to tailor their message to match the surge in mobile e-commerce, and for these they’ll need the knowledge and reliable Internet networks that permit access.

This is where government programs should come in with the investment and infrastructure as well as international collaboration to ease e-commerce across borders. International trade benefits everyone so this should be a collective effort. Despite huge profits for top online retailers, millions of small businesses have lost out because they still struggle to compete even in the cheaper online space. Progress in regulation, cyber-security, and cloud-computing have emerged as challenges to e-commerce during the pandemic but it’s a massive opportunity to build for the future.

Sweet Tips from Ally:

There’s evidence that more B2B businesses have moved online since the start of the pandemic, with many citing online interactions as one of their priorities. Investing in these B2B platforms to help online transactions will support the worldwide recovery.