How COVID Permanently Changed POS and Payments

Expectations for the shopping experience have changed resulting in new payment and buying habits.


As we approach the closing months of year two of the pandemic, we as an industry must come to terms with the long-term changes this unexpected event has forced upon our business models.

Solutions that we originally envisioned as short-term, quick fixes to keep businesses up and running, have now become the norm. Consumers have embraced new payment and buying habits as well as changed perceptions and expectations of what the shopping experience now looks like and should look like in the future. COVID-driven changes have impacted all segments of the consumer buying experience, including how goods are purchased, how merchants are funded, and how POS technology advances have been accelerated to meet marketplace demands 

The Surge of eCommerce

Retail eCommerce was initially conceived as a complement to the in-store buying experience. Prior to the pandemic, consumers gravitated toward eCommerce for hard-to-find items or to simplify holiday shopping. Today, all consumer goods from groceries to liquor, dining, and medications, all have the option to be purchased online and consumer data reflects this change in new buying patterns. 2019 to 2020 eCommerce jumped up 32%, and the first half of 2021 saw additional growth of 9% over 2020 transactions. eCommerce is now the preferred method of shopping for 67% of Millennials and 56% of Gen X.

The Merchant need for Better Cash-flow

The impact of Covid was devasting on Merchants. Almost all merchants suffered lost revenue, staff reductions, and many were forced to close completely. As sales and margins compressed, the need for merchants to maximize revenue and cash flow created an opportunity for several new initiatives to become part of the consumer buying experience:

  • Cash Discounting/Surcharging – Once avoided by both merchants and consumers, cash-discounting gained rapid traction over the past 18 months. Merchants who were struggling to maintain their businesses overcame their fear of alienating customers by passing on the payment processing fees and recognized that the cash-discount model was an easy way to increase revenue by 3-4%. Consumers, empathetic to the struggles retailers are experiencing, began to realize that their convenience of paying by card, came with a cost, and demonstrated a willingness to shift that cost from the merchant to themselves.
  • Buy-Now Pay-Later – A new twist on the old layaway model, Buy-Now Pay-Later, seems like a win-win for consumers and merchants. Consumers, wanting to make a large purchase, but wary of credit card interest rates, or lacking open credit dollars, wanted options. The BNPL model allows the consumer to immediately make a purchase and spread the cost over a series of payments, at no or low-interest rates. Merchants offering BNPL see higher ticket sales and benefit from receiving the entire sale price at the time of purchase, as most BNPL programs are administered by third-party providers who shoulder the financial risk.
  • Bill Presentment Options – As the nation transitioned from the traditional model of working in a centralized office, to a work-from-home model, home improvement/renovation spending experienced some of its largest growth in years. Home Improvement spending increased 3% in 2020 and is expected to end 2021 up an additional 4%. The 2022 forecast includes another 4% increase. Given the instability in the overall economy, manufacturers, suppliers, and field service contractors all began to seek ways to quickly secure their receivables. Billings and receivables traditionally handled via mailed invoices and check payments are now frequently processed by electronic invoicing with embedded electronic payment links and Text to Pay solutions. Both options significantly decrease the lag-time between job completion and payment. Both options can be easily integrated into CRMs eliminating the need for manual entry, resulting in more accurate and timely financial tracking.

Technological Advances

The early stages of the pandemic saw the nationwide shift from in-store dining and shopping to delivery, curbside pick-up, and non-contact engagements. The traditional card-swipe or EMV dip was previously considered the most efficient way to accept payments. However, in the wake of the pandemic, consumers wanted secure, non-contact solutions, and the POS and Payment Industry quickly responded.

QR code menus, ordering and payments have become commonplace in restaurants and cafes. Simply load the QR code on any mobile device, open the menu and place your order. When your meal is complete, customers can pay the bill using a QR code, and leave when ready. This has the added convenience of easing the burden on wait-staff and eliminates the need for patrons to “wait for the check”.

Tap technology, secure and faster than an EMV dip, has been embraced across the board by all the major terminal manufactures and is found everywhere from grocery stores to gas pumps. By hovering close or “tapping” your card near the terminal the card data is quickly transmitted in a secure and safe sanitary manner.

Digital wallets, including Apple Pay, Samsung Pay, GooglePay, PayPal, and AmazonPay all have become an integral part of the payment landscape. Consumers have embraced the “click-to pay” model and digital wallet transactions grew globally by 7% in 2020 and are expected to account for 50% of all global eCommerce transactions by 2024.

The pandemic’s impact on the Retail and Payments industry cannot be understated. The pandemic prompted changes to consumer buying habits and forced our industries to create solutions that put consumer needs at the forefront, derailing the mindset of “business as usual”. If “Necessity” is indeed the mother of invention, then Covid’s legacy on our industry will be that it challenged us to adopt a “consumer first” model of POS and Payment Processing.

Pat Ward

Pat Ward is SVP of Integrated Partners at Aurora Payments.

Pat Ward

Pat Ward is SVP of Integrated Partners at Aurora Payments.