Mohanish Agni

The coronavirus (Covid-19) has impacted countries, economies, business and individuals alike. With even global governments and giant corporations dealing with new challenges, it’s clear no one could have anticipated such disruption – least of all small businesses.

The small and medium enterprises (SME) sector has been among the hardest hit by the pandemic and especially so in emerging economies. However, we must recognise that SMEs are key players in the world economy and important contributors to job creation, especially in emerging markets.

In Pakistan, close to 3 million small and medium businesses account for 40% of the country’s GDP – and according to Pakistan’s Sustainable Development Policy Institute (SDPI), around 1.4 million SMEs may lose half (50%) of their income. Meanwhile, 58% of small businesses have already laid employees off and 47% have cut salaries, with almost 9.5 million of non-agricultural jobs in Pakistan now at risk due to Covid-19.

The impact on brick-and-mortar outlets that are largely offline and reliant on personal visits continues to be severe due to fears of contracting the virus. These traditional merchants, typically, have little savings and much of their transactions take place in cash. A Visa survey conducted to understand the impact of the pandemic on shopping related behavior found that the virus has significantly altered physical store shopping behavior in Pakistan, with 43% of consumers having significantly reduced buying in-store. When they do shop in-store, 55% of customers now use digital payments, with the majority using mobile wallets (51%), and the remaining using cards – both chip and pin (48%) and contactless (37%).

In other words, consumers have switched to buy from small businesses with strong digital capabilities.

For businesses that remain offline and without the option of digital payments, the move to eCommerce will be critical in order to navigate the pandemic. To help this ecosystem of merchants, looking at how to enhance their online avenues, Visa has launched a ‘Small Business Hub’ as part of “Where You Shop Matters”, our regional SME focused initiative that will provide information toolkits for digital growth and resources on how to move to new digital ways of working.

Visa has also collaborated with Daraz, Pakistan’s leading online marketplace, to help encourage the nation’s offline merchants to transition to eCommerce by showcasing stories of small businesses that have succeeded in Pakistan using Daraz’s online marketplace platform, logistics infrastructure and training support. The partnership will also highlight SMEs on Daraz’s platform to a wider consumer base.

While the current circumstances have radically altered consumer shopping patterns and incentivised small businesses to get online, merchants must be conscious that consumers continue to demand a secure and seamless payment experience. As the appetite to transact online grows, so does the need for ensuring online security. The balance between providing a convenient and seamless shopping experience must be balanced with a safe experience too.

A common mistake among new online merchants is to overcompensate for fear of fraud by implementing security solutions that are so rigid that they prevent legitimate consumers from shopping and checking out with ease. According to findings from Visa’s survey, 60% of consumers in Pakistan have abandoned their online shopping carts because of authentication delays or failure.

Visa Secure, Visa’s new program governing online transactions uses the EMV 3-D Secure industry-wide messaging standard that merchants and issuing banks must follow to verify cardholder identity before a transaction is sent for authorization. Visa Secure delivers greater fraud prevention by sharing up to 10 times more data with issuers for better risk analysis and advanced decision making.

In addition to security, customers have also come to expect convenience, minimal effort and higher transactional speed, making it important for merchants to offer omnichannel payment solutions to enhance the consumer experience, and build and retain a base of loyal customers. In the payments arena, omnichannel refers to the ability to allow customers to conduct transactions in multiple ways without much difference in convenience or service including with NFC, QR code payments and in-app purchases or payments.

At Visa, we remain committed to supporting Pakistan’s small business ecosystem and championing their recovery. For our economies and societies to thrive again, it is imperative that these merchants bounce back.

The writer is General Manager - Levant and Pakistan, Visa.