With the global pandemic forcing many physical businesses to close and people to remain indoors, the commerce landscape has been severely impacted. Consumers are often unable or unwilling to shop in physical stores, and traditional payment methods such as paper money are increasingly viewed as potential mediums to transmit the deadly COVID-19 virus. Retailers have responded by changing the way they operate, communicate with customers, and support transactions.

For many retailers, these changes revolve around reimaging their digital footprints and digital outreach strategies. These merchants are focusing on aligning their enterprise around the end-to-end experiences that drive customer satisfaction. Such efforts include modernizing existing systems, focusing on increasing authorization rates, and reducing declines.

To better understand how merchants are responding to COVID-19, PaymentsJournal sat down with Peggy Alford, EVP of Global Sales at Paypal, and Ted Iacobuzio, Vice President and Managing Director of Research at Mercator Advisory Group. During the conversation, Alford and Iacobuzio discussed how merchants are now interacting with their customers, what opportunities and challenges exist, and how PayPal is helping companies navigate this new reality.

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How COVID-19 has impacted the way merchants and consumers interact

The most salient trend in the retail world brought on by the pandemic has been the accelerated shift from physical to digital. A digital transformation that was expected to take two years has instead been compressed into just the past two months.

In April, for example, PayPal added about 7.4 million new active accounts to its platform, a monthly record for the company. Pre-COVID-19, PayPal would typically see about 100,000 net new users on its platform each day. Now, this number has shot up to almost 300,000 net new users a day.

The uptick in new accounts has been accompanied by an uptick in volume. May 1, 2020 marked the largest single day of transactions in PayPal’s history, eclipsing both Cyber Monday and Black Friday—two of the biggest commercial days of the year. The rise in new users and transaction volume reflect the fact that there is substantial demand for digital payment solutions.

“What that’s indicating is the companies we serve are really looking to continue operations and grow their business by shifting to digital,” said Alford. With consumer behavior changing, this shift toward digital is more or less a requirement; companies that fail to respond will lose out to thos...