NOTEBOOK: A glimpse inside the card payments world amid COVID-19

By Joe Gardyasz, Senior Staff Writer - Des Moines Business Record
Friday, April 3, 2020

Each holiday shopping season the folks at SHAZAM, the Johnston-based electronic payments network and debit card processor, provide an update on card usage trends. I decided to check in last week with SHAZAM’s vice president of strategic alliances, Patrick Dix, to see how the retail world turning upside down amid the COVID-19 pandemic has affected debit and credit card transactions. 
            
Dix first emphasized that the SHAZAM payments network uptime has remained at its usual 99.9999% level during the coronavirus pandemic. “Our banking partners are not thinking about the payments systems — they’re expecting us to keep it working and safe, and that’s what we’re doing,” he said. 
            
With restaurants, entertainment and retailers largely shut down, card activity has shifted significantly from point-of-sale transactions to online transactions from home computers and smartphones, Dix said. Notably, the overall level of transactions is up slightly over this time last year, but not by a significant amount. 
            
“I think it’s way too early to know what the long-term effects of this will be,” he said. Not surprisingly, however, “there was a crazy spike at the grocery stores right after the [governor’s] disaster declaration,” he said. Meanwhile, travel, restaurant and retail card usage has declined dramatically. 
            
“Our volumes on the debit card side are going to be much more insulated than credit purchases, which are much more discretionary in nature,” Dix said. For instance, takeout and delivery card purchases are probably replacing restaurant dine-in tabs, but people aren’t pulling out their credit cards to charge trips or hotels right now. 
            
“I think people are holding back on some spending and use, because they don’t know where they’re going to be in six to eight weeks,” he said. 
            
SHAZAM conducts “tabletop” disaster exercises about twice a year to practice for real-life situations like these. Coincidentally, just one year ago its exercise scenario was a practice global pandemic that forced 95% of people to work from home. “Like that’s going to happen,” Dix recalled many people saying at the time. 
            
“Now, [the SHAZAM staff is] 95% at home — we have gotten it down to very, very small numbers at the office. But we are functioning just as we were before. Everybody rolls their eyes at disaster planning, but it really pays off.”