7 ways retailers, banks and fintechs are innovating amid the coronavirus pandemic

Amid the disruption of the coronavirus pandemic, many companies are taking a chance on innovative new technologies to keep their customers engaged.

This change is happening on a global scale and is being driven by banks, technology companies, retailers and governments — all of which have had to overcome hurdles moving money when populations are locked down and shoppers are fearful of infection.

This story was compiled from reporting by PaymentsSource writers including John Adams, Kate Fitzgerald, David Heun, Michael Moeser and Daniel Wolfe.

empty grocery shelves in China
A customer pushes a cart past empty egg shelves at a supermarket in Shanghai, China, on Tuesday, Jan. 28, 2020. Governments, global companies and international health organizations rushed to contain the spread of a SARS-like coronavirus that has claimed more than 100 lives in China, with the number of cases soaring overnight. Photographer: Qilai Shen/Bloomberg
Checkout-free in China
As of February, Shanghai's massive crowds were already gone, replaced by restricted movements, empty metros, and a rush on face masks and hand sanitizer.

But grocery stores stayed open. They had to.

It was an odd, and unwelcome, test of new retail technology that allows consumers to shop with minimal interaction with others.

“We didn’t anticipate the outbreak, and we were very saddened. It’s been devastating to many people,” said Steve Gu, co-founder and CEO of AiFI, a San Francisco-based company that builds checkout-free technology. “But we observed that it could be a new opportunity as well. The reason the virus is so dangerous is it’s spread person-to-person.”

AiFi opened its first store in Asia about a month earlier, an 800 square foot store in Shanghai that’s typical of many early checkout-free stores. It’s an always-open convenience store with minimal staff, accidently positioned well for the virus. The compact store carries basic day-to-day items, such as food, medicine and face masks.

“With this fully checkout-free store, people can shop in an environment in which they don’t have to interact with anyone,” Gu said. “They don’t have to talk to anyone while they’re shopping.”
qr code menu
A QR code menu at Jungsik restaurant in New York, U.S., on Wednesday, Sept. 30, 2020.  New York City restaurants reopen indoor dining on Sept. 30 after a six-month, pandemic-induced shutdown, many restaurateurs worry they will struggle merely to get by. Photographer: David 'Dee' Delgado/Bloomberg
Dining goes digital
In April Presto, a Redwood City, Calif.-based restaurant payment solutions provider founded in 2008 rolled out a quick-setup QR code payment solution solution in response to the pandemic, and was immediately swamped with hundreds of thousands of inquiries, according to a spokesperson. Restaurants in more than 22 countries had ordered the kit as of September.

Presto's QR Code Order & Pay solution overlays atop a restaurant's existing POS system and enables diners to view a full menu, order and pay, with options to join loyalty and marketing programs, without the aid of a waiter. The QR code system also supports pre-ordering, takeout and a digital waiting list for dining rooms.

Schaumburg, Ill.-based NMI, which markets payments processing to small and midsize businesses, also has seen an uptick in demand for its QR code payment solution, particularly among merchants with smaller store footprints and those in nontraditional settings like farmer’s markets and pop-up stores.

“The pandemic and the demand for contactless payments has raised the profile of QR codes, and more merchants are asking us about it,” said Jennifer Sherman, NMI’s senior vice president of product.
Venmo credit card with QR code
Venmo's QR credit card
PayPal also wants to ride the QR code adoption wave, but not at the expense of NFC. That's why it put both into Venmo’s first credit card.

A QR code adorns the front of the Visa-branded card, which also has NFC contactless payments built in. The card launched in October, issued by Synchrony Financial.

The Venmo credit card uses the digital-first approach Apple Card popularized, so all activities from account activation to managing transactions and cash-back rewards occur within the Venmo app.

Venmo’s 60 million users, with a heavy concentration of millennials, are using QR codes frequently to access menus and pay at thousands of restaurants that added them after coronavirus prompted people to minimize contact with germs. Highlighting QR codes on the card at this moment could help drive PayPal’s goal of expanding acceptance of the PayPal/Venmo QR code at more merchants.
disinfecting an ATM
An employee sprays disinfectant on a automated teller machine (ATM) inside a Deutsche Bank AG bank branch in Frankfurt, Germany, on Tuesday, May 12, 2020. Deutsche Bank AG has re-opened almost half of the branches it had closed, in a sign the bank believes the coronavirus spread has peaked in Germany. Photographer: Alex Kraus/Bloomberg
Don't touch that ATM
The payments technology maker NCR is accelerating software that allows mobile apps to perform ATM withdrawal requests ahead of time.

“We’re trying to merge the physical with the digital," said Terry Duffy, senior vice president and general manager of digital first software and services at NCR. “You can do more things now on mobile so we’re bringing those experiences together.”

Like most businesses categories, there were existing trends they could latch onto, so the ATM makers’ response has not required a new form of ATMs to be invented on the fly. The boost of contactless and digital retail has drawn more attention to the broader potential for contactless transactions, and that can aid ATM evolution, according to Simon Powley, head of global advisory consultant services at Diebold Nixdorf.

Companies like Starbucks and 7-Eleven are relying on mobile ordering as a way to front-load the consumer experience, removing as much physical interaction as possible to speed engagement and reduce crowding. The same concept applies to ATMs — pushing part of the interaction away from the machines reduces lines at ATMs, or reduces the amount of time people spend at ATMs, which are often located in bank branches, stores or other locations that want to reduce crowding

“Giving consumers the ability to pre-stage transactions splits the interaction into an ‘initiate phase’ and a ‘finalize’ phase, enabling them to start their transactions on a mobile device in advance and finish at the ATM or branch with less waiting time and whenever they decide to complete the transaction,” said Powley.
Stack of U.S. dollars
U.S. one-dollar bills are displayed in New York, U.S. Photographer: Scott Eells/Bloomberg
Pandemic payroll
The economic impact of the coronavirus pandemic could lead to the ongoing expansion of workers’ access to early, or earned wages (EWA) through advances and instant payouts, including to new types of users.

Fintech firms specializing in employer-sponsored EWA services have seen exponential user growth during the pandemic, with the rising numbers of gig workers hired in health care, fast food and grocery sectors, and new EWA providers continuing to join the fray.

But this isn't just a trend for the gig economy. Instant-wage access could spread across the income spectrum in the post-pandemic economy.

“Weekly or bi-weekly wage payment options will shift to being on-demand, and will also begin to spread to white-collar, salaried workers,” said Ali Raza, senior vice president for the U.S. region at FSS Technologies Inc.

Some third-party EWA providers also hope to expand their roles, becoming gatekeepers or bridges to additional financial services — including credit — for workers, based on their payroll history.
Subway ordering kiosk
Don't let a lockdown go to waste
Subway’s traditional internal process to test new country-specific terminals cost about $50,000 per device, or about $7 million per year for quality assurance, not counting the cost of the actual terminals, which needs to be negotiated with vendors in each country.

During the pandemic, Subway instead turned to a centralized basket of messaging protocols and payment data standards to create a network effect for the myriad payment types that exist in different countries. The work dates to an initial 2018 decision Subway made to find a simpler way to update and install payment terminals, but has taken on added urgency as locations globally scramble to adhere to new consumer patterns and health codes that also differ from one nation to the next.

“Our business is still mostly in-store, though we are seeing an increase on our digital side,” said Benoit Lamoureux, payment product owner at Subway. “On the in-store side, we had to be able to create the same integration for all of the different systems we were working with.”

So far in 2020, Subway, via nexo-affiliated partners, has executed payment projects on multiple continents, with deployments often occurring as part of pandemic workarounds and avoiding the $7 million testing cost. The chain used Adyen to develop a diverse range of acceptance options to support loyalty, gift cards, mobile wallets and local payment methods. Subway can also view data across franchises. The deployment began this year in North America, covering 25,000 locations and 500 million card transactions per year.
IRSBL
A digital dollar
The push for a public option to digitize government payments has gotten stronger, and the discussion has moved on from whether it should happen to how it should happen.

The heavy lift required for the coronavirus response has pushed central bank digital currencies into the global spotlight. It has also changed the CBDC conversation from adjusting to cryptocurrency and countering Facebook’s Libra project to improving relief to shore up struggling economies. The European Union, for example, has gone from vowing to stop Libra to pushing a digital euro to manage cash access tied to the virus.

The U.S. made a tepid move to study digital currency in 2019, but in the short time since several U.S. politicians have pushed for a government-backed P2P app, or a “digital dollar,” while Visa has sought to patent technology that would make the card network a potential partner for central bank digital currencies.

“Progress from little to no discussion or engagement in the U.S. a year ago around a U.S. CBDC — to our current state of advance and informed dialogue — is material and important,” said Dave Treat, senior managing director and global blockchain lead at Accenture and director of the Digital Dollar Project.
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