- Jean-Michel Soopramanien, Technical Director, Total Processing
Businesses should be looking to use contactless payments and online payment methods to substitute every previous touch point in order to adapt to the changing lifestyles that come with preventing COVID-19.
It is no longer business as usual, but it is business; and that can continue if businesses can adapt to various methods such as pay-by-link to fulfil increased or differing deliveries of service across industries like the food sector and provide their customers with gift cards in order to slow the loss in revenue that might, ultimately accrue in the coming weeks.
In something completely different that asks merchants around the world to ride the ‘curve’ and prepare for the worst - as both humans and business owners - coronavirus has dealt, and will continue to deal tolls to the economy on a global scale for months to come.
The complete economic ramifications of the coronavirus are yet to be tallied but with experts undoubtedly placing bets on another recession and financial aid nearing a point of inflation; humanity is still banding together - even in periods of self isolation.
Nevertheless, businesses need to adapt and fast. Whilst certain sectors are bound to take a devastating hit from the reduction in foot traffic and travel, there is equally a large amount of the population looking to continue supporting small businesses whilst at the same time; fulfil convenience at a point of extreme social distancing.
No one knows just how much the coronavirus will affect every country but social distancing and isolation at some point in every country is almost a given; with other countries ultimately ending up on full lockdown.
How Are Governments Responding?
At the time of this article being written - on the 17th of March - the US Central Bank has slashed interest rates, with the Bank of England following suit in cutting rates from 0.75% to a historic 0.25%.
Update: 19/03/2020 - The Bank of England has since reduced these interest rates to 0.1%.
This comes alongside the news that statutory sick pay will be paid from the first day of illness in a bid to relieve the financial strain on the British people throughout these trying times. More recently, Canada, France and the EU have closed their borders; and the UK government has encouraged extreme social distancing and isolation for those with or living with the symptomatic or vulnerable. These measures have been recommended for at least 12 weeks.
However, despite these measures, significant restrictions to global trade have not been enforced. Regardless, some delays to business supply chains are inevitable.
SME And Sole Trader Support:
As the UK budget arrived along with the earlier stages of confirmed COVID-19 cases, the UK government announced a coronavirus business interruption loan scheme to assist SMEs. However, it is still unclear whether this scheme will apply to all SMEs, and it does not apply to sole traders.
The loans - operated by the British Business Bank - will mean that the government will provide an 80% guarantee on loans for lenders financing small to medium enterprises who are likely to suffer throughout the outbreak. Grants of up to £25,000 (for businesses with a rateable value less than £51,000) and business rate relief will also be available to small businesses within the retail and hospitality industries depending on where in the UK they're based (with a rateable value less than £61,000).
*Update 21/04/2020: £10,000 grants are available to businesses in the hospitality and retail sector with a rateable value under £15,000.
Update 23/03/2020: Any loans over £250,000 must be secured by company assets.
Update 24/03/2020: Companies will be able to loan up to £5 million (who turnover less than £45 million a year) repayable over 6 years and are not subject to a guarantee fee. The Government will cover interest payments and lender fees for the first 12 months.
*Update 21/04/2020: So far the loans have had an 80-90% acceptance rate.
Update 21/04/2020: Announced Funding for Start-Ups
The Government has pledged £1.25bn in assistance to protect innovation in start-up companies affected by Coronavirus. With funding of £125,000 - £5m available from the government, to be matched by private investors; it has been announced that these loans will convert to equity within businesses using the scheme.
To qualify, businesses need to be unlisted and registered in the UK - with a minimum of £250,000 in equity investment over 5 years from 3rd parties.
£250 million is available in the form of other grants and loans.
**Update 29/04/2020: Announced Support for Micro-businesses **
The UK government has announced new support for loans that can be accessed with 24 hours of approval. With 100% governmental guarantee - in comparison to the 80% guarantee provided on loans through CBILS - small businesses will be able to apply for loans worth up to £50,000 or 25% of their turnover. The minimum loan provided will be £2000. The loans provided will be interest free for 12 months with no repayments expected in the first year.
The scheme is set to launch at 9am on May 4th.
Similar financing schemes will be available through and detailed by the BBB’s partners in the coming weeks. Similarly, in the USA, disaster assistance loans of $2 million will be available for SMEs who need it.
Update 23/03/2020: Outside of government assistance, Facebook is launching a $100 million grant to allow small businesses to continue advertising. Details of the grant and how to apply for it are yet to be specified.
For the same SME businesses, refunds for statutory sick pay can be sought for any employees affected by coronavirus; for up to 2 weeks - with the added plus of being able to reclaim expenditures for anyone who has made a claim due to self-isolation.
With the strain on the UK healthcare system a given, employers can also provide statutory sick pay without requiring a fit note from a GP.
Update 23/03/2020: The government has pledged to pay 80% of wages for employees earning up to £2500 a month via the PAYE scheme. This is what they have deemed the wage of a typical worker. This scheme applies to wages backdating to March 1st and employees that have since been laid off, can be put back on the payroll in light of this scheme.
*Update 21/04/2020: This wage will be tax deducted at the applicable rate and employers will be expected to pay the usual pension contributions unless the employee opts out. Furloughed wages are still subject to national insurance contributions and can be used to accrue holiday and sick leave allowances. An employer still has the right to make an employee redundant at the end of the scheme.
*Update 21/04/2020: This Scheme has been extended to include employees added to the payroll from March 19th, 2020.
*Update 25/03/2020: Clarification taken directly from the government's business support hub details that this scheme, 'applies to employees who have been asked to stop working, but who are being kept on the payroll, otherwise described as ‘furloughed workers'... This is to safeguard workers from being made redundant.' There is every emphasis that employees who are asked to work from home, should be paid in full or by an agreed renumerated amount by their employers.
*Update 21/04/2020: This scheme has been extended through to the end of June.
*Update 21/04/2020: The government's job retention scheme in which employees are furloughed and paid a percentage of their salary can also be claimed by company directors on a PAYE Scheme. However, Directors cannot claim dividends. Employers can also claim for shielding employees or employees in self isolation using the scheme - if they are shielding because of someone in their household.
Whilst there has also been a reduction in business rates and a relaxation on the rules surrounding universal credit for sole traders, the conditions at this time are vaguer.
Update 23/03/2020: Universal Credit has been increased by roughly £1000 over the next year or roughly £20 per week. This can be claimed at the standard statutory sick pay rate for sole traders.
Update 24/03/2020: VAT Payments for all businesses have been deferred for 3 months. The new date will automatically apply from the 20th March to June 30th 2020. UK registered businesses will have until the end of the tax year 2020-21 to pay any liabilities from this period.
*Update 21/04/2020: Companies will also receive a 3-month extension in which to file their accounts.
Sole Traders will have additional access of up to £73.10 per week (aged 25 and over) via the government’s Employment and Support Allowance Scheme from the first day of self isolation as opposed to the eighth day - as the standard policy usually requires.
Update 23/03/2020: Self-assessment tax payments have been deferred from July 2020 to January 2021
The relaxation of the rules regarding business rates does suggest that there will be a 100% reduction in rates throughout 2020-2021 for some businesses, but there is yet to be complete clarification from the government on this.
Local authorities are also expected to be given funding to assist smaller businesses and recently expanded retailers throughout COVID-19, with more details being released on March 20th.
Update 23/03/2020: Given the forced closure of gyms, restaurants and repurposing of hotels for key workers and the homeless in addition to reduced human footfall, business rates have been reduced by 100% across all sectors. Aid is still being considered for the aviation sector.
Update: 21/04/2020 The UK Government has launched a quick assessment tool, allowing you to find out which schemes and grants you may be eligible for, check it out here.
How To Adapt To The Near Future:
Without a doubt, we’ve all seen first-hand, local businesses in our communities begin to try and adapt to COVID-19 and the UK government’s protective measures in such a short amount of time. With communities still wishing to support businesses that are local to them, and others going online as bigger retailers close their physical storefronts, there is a definite, collective effort for businesses of all sizes and types to scale and adapt their businesses like never before.
With a closer look at how China has responded to quarantine measures, and how US businesses are beginning to respond, we can take both a human and data-based approach to how technology and different payment methods are helping businesses mitigate COVID-19; without the risk of shutting down.
Surveys conducted across the United States revealed that 27% of businesses expect the coronavirus to have a moderate to high impact on their revenue, whereas another 30% expect it to have a moderate to high impact on their supply chain.
Note that this data comes as China recovers from the peak of its outbreak and Europe and the US are only experiencing the early stages of COVID-19.
Whilst it’s hard to definitively predict how many coronaviruses will affect businesses, tourism and aviation has already seen an effect. As the aviation industry prepares to ask the government for a £7.5bn bailout as air travel stagnates, the railways have already seen an 18-20% decrease in passengers over the last week.
However other industries, such as the food service, social media and gaming industries might be set for increased revenues over the coming months.
With a look at data taken from the peak of the Chinese outbreak, Deliveroo lunch orders in Hong Kong increased by 100% in February 2020 in comparison to the month before. On the whole, downloads of the top 10 food ordering apps in the Chinese Apple store increased between January 13th and February 3rd.
Similarly, shares in social media and teleconferencing services such as Zoom and Slack increased two-fold as workers began to self-isolate and work from home.
As those in isolation began to fill their time throughout the peak of the outbreak in China, more than 22 million downloads were registered across Apple's Chinese app store; with game downloads increasing by 40% during the first 2 weeks of February (in comparison to the same period in the year before).
Ideas To Stay Processing:
It’s already apparent in our local communities that small businesses are vying to adapt to new lifestyles for an indefinite amount of time. Having looked at the data we have on hand, there’s thankfully, some insight into how certain industries are continuing to serve customers - even from afar.
Moreso, whilst our services to our merchants have always been diverse in offering solutions across e-commerce and at the point of sale, we empathise with the strain and concern in needing to adapt business operations throughout COVID-19, and would like to detail some of the ways in which you may be able to navigate your business throughout these times:
Encourage and facilitate the use of contactless payments at the POS through all major card schemes, as well as via Apple Pay and Google Pay.
As the landscape continues to change, prepare to migrate to an online store or virtual terminal in order to take payments over the phone or by link, to ensure that deliveries and services can be fulfilled.
Customers will be able to shop locally but online through a variety of payment methods that suit them through leading platforms such as Shopify, WooCommerce and Magento.
Restaurants can offer take-out only or ‘curbside delivery’ to minimise contact; offering contactless payments at the point of sale, over the phone, online via their website or via pay-by-link.
Couriers can equally make contactless deliveries.
Merchants can also extend support to their customers through a variety of payment types and methods, whether that be by instalments or with a pay-later scheme such as Klarna. Klarna allows merchants to get paid now, whilst allowing the customer up to 30 days to pay in full. Alternatively, the customer can pay over three 30-day periods with Klarna Slice-it.
Customers can support local business by purchasing a gift card to spend later whilst the merchant receives the revenue now.
Gaming merchants can migrate and/or optimise their delivery platforms, increase in-app payment methods and offer discounts to support customers who are currently isolating.
Some industries will suffer. In modern times, there hasn’t been a pandemic that threatened the economy on such a global scale. Whilst parts of the world have sadly suffered through epidemics and crises, COVID-19 is unprecedented, but our support is boundless.
With the support and advice of both Total Processing and your local governments, we’re encouraging businesses to continue forward. However, we ask that you prioritise your health and community above all.
In the UK, the HMRC has set up a COVID-19 hotline for any assistance with business concerns and tax repayments.
*Update 21/04/2020: The hotline for the government's 'Time To Pay' deferral scheme can be reached at: 0800 0159 559.
Update 24/03/2020: Full government Business Resources and support can be found via the official government hub.
Total Processing will continue to support merchants to the fullest extent and quality of its services for as long as possible. Any changes to our services will be reflected via our google business hours and website.
Total Processing is proud to facilitate payments across the globe with our low rate promise; working with over 300 banking partners, and 198 payment methods including Mastercard, Visa, Amex, Apple Pay, Google Pay, Klarna and Bitcoin.