For B2B payments during the coronavirus, processors need to respond to the response
Given the overall deleterious effects of coronavirus and its associated fears, not knowing how long the disease will be a major disruptor of world commerce has a major effect on business planning.
Businesses make projections and then make commercial commitments reflective of those projections. Not knowing the general state of affairs one month or six months in the future prevents businesses from gearing up to deal with a post‑coronavirus world.
If economic activity is reduced, then B2B payments will be reduced. If there is less business‑related buying and selling occurring, there will be reduced need for organizations to pay for goods and services. This phenomenon will impact all commercial payment channels, including checks, wire transfers, or direct account transfers. Additionally, payments processors can also be directly and negatively affected by coronavirus measures. Financial institutions and processors may reduce staffing to minimize spread of disease. Financial organizations may activate standard pandemic procedures that may curtail incidents of coronavirus but increase operational inefficiency – this can create payments bottlenecks that slow down business‑related payments.
Some Chinese enterprises have been cautiously resuming commercial operations on a limited scale since the incidence of coronavirus cases has slowed for now. These efforts are tentative and may be rolled back if coronavirus cases persist.
One of the primary problems with the coronavirus breakout is the apparent global pervasiveness of the disease. Outbreaks of the disease have occurred throughout the world with concentrations of reported cases in a number of places, including China, South Korea, and Italy. But the impact of the disease is multiplied because of the profile of the disease. Some individuals go untreated for days at a time because their symptoms are mild and they may not recognize they are infected. In the meantime, they are carriers who are infecting others. Therefore, civic, governmental, and medical authorities can have a difficult time concentrating resources to best confront primary sources of disease – actions are reactive after coronavirus has already been established within a potentially sizable local population.
The reported incidences of coronavirus and attendant deaths have caused government authorities to quarantine citizens, isolating them in their homes. This action is certainly appropriate in the severest outbreaks like the one in Wuhan. But because of the uncertainty about where additional outbreaks may occur, quarantine areas have been expanded in an attempt to slow the spread of the disease. Additionally, businesses and individuals have started to self‑quarantine, again, in an effort to preemptively prevent additional outbreaks. All of these actions have greatly reduced or even halted the production of goods and services. Because of the scope of reported incidences of disease, this behavior has negatively affected worldwide production, causing global business contraction.
Some enterprises impacted by externally imposed or self-imposed quarantine can continue business at almost a normal level. For example, employees at information technology businesses can use remote access and collaborative applications to continue to be productive, both as individuals as well as teams while under quarantine. Therefore, pockets of enterprise can continue to function with minimal impact in the face of quarantines.
However, not all enterprises can continue activity at pre-virus levels unless employees congregate in productive groups to create goods and services. For example, manufacturers of vehicles require workers to be physically present at factories to assemble cars and trucks. Restaurants require cooks and waiters to process customers, assuming they can attract customers in the face of coronavirus uncertainty. Truck drivers can deliver goods autonomously, but they have to handle potentially contaminated goods and interact with possibly infected shippers and receivers. Airlines have been especially hard hit because passengers do not want to travel to areas of possible coronavirus outbreaks to avoid contamination as well as the possibility of being quarantined for extended periods away from home.
Organizations that are perceived to be outside the scope of coronavirus infection can be impacted by reduced production in other parts of the world because of the interdependence of economic activity. This impact has been particularly acute since many worldwide producers or processors of goods are reliant on Chinese‑supplied components. Because China has been at the epicenter of coronavirus outbreaks, it has experienced the greatest negative impact of quarantine activity and business slowdowns.
In addition to those enterprises that are directly impacted by coronavirus fears, other businesses that are reliant on the overall level of economic activity are affected as well. Oil prices have dropped significantly because of reduced estimates of energy usage. Similarly, suppliers of raw materials and basic commodities, like copper and steel, have experienced selloffs because their customers will not be producing as much.