Global Digital Commerce Spending Could Fall By 14 Percent This Year
6-25-2020
Given the economic disruption caused by the coronavirus disease (COVID-19) pandemic, total digital commerce transaction values are expected to decline from $11.3 trillion in 2019 to $9.7 trillion in 2020, then rise again next year, according to a new study from Juniper Research. While some sectors are seeing increases in digital spending, others—such as digital ticketing—are seeing steep declines, according to the whitepaper, “Coronavirus: How Will It Impact Digital Commerce?”
Since March, when the World Health Organization issued a statement advising consumers to use contactless payments to reduce the risk of transmission, mobile and online payments of essential items have been on the rise. Digital payments connected to grocery shopping, for example, are seeing a surge. Retailers that offer grocery delivery are dramatically increasing their capacity to do so, and are recruiting staff and upgrading their IT systems to process orders, notes Juniper. In addition, outside vendors are entering the grocery space, with companies like Uber Eats announcing partnerships to deliver essential items to shoppers in several European countries. “It is highly likely these services will continue to be involved in grocery delivery after the end of the pandemic,” reports Juniper.
But given the stay-at-home orders implemented in areas across the globe, some industry sectors are seeing dramatic decreases. Travel-related spending is expected to take one of the most significant hits, with attempts to curb the spread of COVID-19 resulting in massive reductions in both national and international travel. Juniper predicted that digital ticketing spending will drop by 59 percent in 2020 compared to 2019, driven by unprecedented cash flow challenges.
The good news is that digital commerce spend is expected to recover next year and may exceed 2019’s levels by 4 percent. The economic disruption from the pandemic may last well into 2021, Juniper suggests, but digital services are better positioned than offline commerce for recovery, “as there has been considerable migration from offline spend to online during the pandemic.”
Ultimately, the changes in payment behavior among consumers—including increasing numbers of consumers adopting contactless payments and buying groceries online—will bolster growth in digital commerce spending over the next five years, according to Juniper.
Looking to the future, consumers in areas that had been less affected by the pandemic—including the West North Central and Mountain regions—reported the most optimism regarding recovery of the economy.
About ETA
The Electronic Transactions Association (ETA) is the world’s leading advocacy and trade association for the payments industry. Our members span the breadth of significant payments and fintech companies, from the largest incumbent players to the emerging disruptors in the U.S. and in more than a dozen countries around the world. ETA members make commerce possible by processing approximately $56.75 trillion annually in purchases and P2P payments worldwide and deploying payments innovation to merchants and consumers.
ETAs membership spans the breadth of the payments industry to include independent sales organizations (ISOs), payments networks, financial institutions, transaction processors, mobile payments products and services, payments technologies, and software providers (ISV) and hardware suppliers. For more information, visit electran.org.