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Bloomberg has a story about how, as the pandemic has accelerated e-commerce and a number of companies made the shift from being B2B distributors to direct-to-consumer, "payment companies that process online transactions are seeing a boom."

For example, "PayPal Holdings Inc. posted a surge of as much as 30% in the number of newly-active customers in core markets who use the service four times or more in 10 days."

“People are jumping in with both feet, and not just dipping their toes in the water,” says PayPal CEO Dan Schulman. “It’s not hyperbole that we’ve seen a three- to five- year acceleration. That’s the math.”

Bloomberg writes that "Visa Inc. has seen online spending excluding travel increase by 25% from a year earlier every week since mid-April, twice the growth it was generating before the pandemic.  In-store spending, meanwhile, cratered 50% in early April, Visa said. It improved in recent months as cities around the world started to reopen, but still posted a decline in the high single digits by late June."

The e-commerce boom is good for banks and payment companies in several ways.  First, "the widespread shift to online shopping is an opportunity to help counter a decline in overall spending on credit and debit cards. Online, their cards don’t have to compete with cash or checks, which are still widely used for in-person transactions in the U.S."

And second, "Merchants pay a higher fee for these so-called card-not-present transactions. The networks argue it’s because fraud is more rampant in online purchases, meaning they have to do more to root out the bad guys."

KC's View:

One of the execs who talked to Bloomberg makes the point that what online retailers and financial services companies are trying to do is create "muscle memory" on the part of consumers.  The longer that pandemic conditions last, the stronger those muscles will be.

I have to admit that one of the areas in which I had not been seduced into doing a lot of online shopping is fresh food, but the pandemic has changed that to some degree.  I've found that Prime Now, which allows me to order online and then get free curbside pickup if I spend $35 or more, to be pretty much indispensable over the past five months.  (I'm lucky.  The nearest Whole Foods is about a half-mile from my house.)  And it becomes more of a reflexive choice each day … which is exactly what Amazon/Whole Foods wants to hear.