The COVID-19 outbreak is a true black swan event with its impacts reverberating across all aspects of society. In moments of crisis, clear, concise and up-to-date information is what every financial decision maker needs in order to form a proper strategy. The increasing level of global interconnectivity between businesses and institutions of all types means that localized, up-to-date information is more valuable than ever. In the payments sector, a delay in fund transfer due to the COVID-19 pandemic can impact a paycheck, relationships with suppliers, and even the ability to provide critical aid to those in need. While each user of a global payments network has different needs, the current outbreak impacts them all equally, making relevant information critical to minimize the amount of payments disruption to their business.
Impact on Payments to Employees
As our global society has become increasingly interconnected, one form of payment that is regularly made by both the largest corporations as well as the small to medium sized enterprise, is payroll. For example, as ridesharing apps like Uber, Grab and others expanded across the globe, they needed to find efficient ways to pay their drivers in local currency. This is a process that is normally handled by banks behind the scenes usually with the corporation initiating the payment only knowing when a transaction is successful or unsuccessful. However, when a country like Egypt for example, where Uber and other multinationals operate, reduces their banking hours, payment execution and settlement is delayed. This can ultimately lead to workers not receiving a much-needed paycheck on time, an issue many cannot afford during this time of crisis.
Impact on Payments to Suppliers
It is easy to assume this issue will only impact multinational corporations, but as a result of globalization, even small and medium sized enterprises (SMEs) conduct business internationally. One common way SMEs use payments is when they pay their suppliers. In order to make sure their supplier in Bangladesh or Pakistan is properly compensated, an SME will send the payment for the commodities or other raw materials directly via our global payment network. As a result of government lockdowns, the execution and settlement of payments to countries like these are impacted, with banks reducing operating hours. A delay in the payment to a supplier can have significant ramifications for SMEs in terms of pricing of goods and relationships, which ultimately impacts their ability to deliver to the end consumer. On the ground intelligence for SMEs is critical to determine timing of future payments, or if a payment was in process prior to a country’s lockdown, when execution and settlement will occur.
Impact on Critical Aid Payments
While business considerations are all important, one party that will be particularly impacted from a payments perspective as emerging markets begin closing their banking systems is charities. As one of the biggest users, charitable organizations rely on global payments services to secure the receipt of large sums of donations to countries in need. Transferring and exchanging funds into local currency is essential to facilitate the lifesaving work these groups do for people on the ground. However, a delay caused by reduced banking hours in Botswana or the inability to send funds to North Sudan has serious ramifications for the people in these local communities. The rebuilding of homes, the delivery of life-saving medical treatment, or possibly upgrading essential infrastructure will all be affected and put on hold if charities are unable to support their local teams financially. Intelligence and transparency regarding payments is critical for charities attempting to assess the impact on their operations.
The impact of the COVID-19 outbreak continues to reverberate throughout the economy and society, and like other forms of international business, global payments services will feel the effects of the outbreak as well. In order to make informed decisions during this moment of crisis, global payments users need as much information as possible so that they can have an accurate picture of the impact on operations.
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