How the payments industry's COVID-19 response changed, month by month

Most of the world hadn't even heard of the coronavirus when its impact showed up inStarbucks corporate earnings .

Like a peek into the future, the virus created headwinds for Starbucks' aggressive expansion into China, where it gets about 10% of its revenue. In a scene that would play out globally, Starbucks was forced to close stores and instill safety workarounds that would add to its cost, cut into its business and become part of a routine for merchants of all sizes and categories.

At the start of the year, it was hard to imagine a city of 24 million on virtual lockdown, but that’s what the coronavirus had already done to major Chinese cities like Shanghai.

It was the first unwelcome test of new retail technology that allows consumers to shop with minimal interaction with others. China was already a bit ahead of the U.S. in opening checkout-free retail stores, but it was still an uncommon experience, and nobody knew quite what to expect given the emergency that had hundreds of millions of Chinese citizens at home most of the time, but still in need of supplies.

By the end of the month, the card brands had started to publicly admit: Things were OK for now, but if coronavirus becomes a pandemic, all bets are off.

Because a major portion of Mastercard's business in China occurs through e-commerce, and the company is not hurt as much by canceled travel plans, president and CEO Ajay Banga was hoping for the best. “If it becomes a much bigger crisis, then we’ll take a look at those numbers. Have to take that as it comes; it’s the only way to look at this,” Banga said in March.

Visa CEO Alfred Kelly also advised caution, acknowledging the uncertainty that surrounds all companies in contemplating how to counter the virus and keep business losses to a minimum. "When we look at our numbers in China, we see some declines, but the Chinese New Year was a month earlier this year and spending slows around that holiday period," Kelly said.

American Express CEO Steve Squeri told analysts that the New York-based company, a leading provider of cards for business travel spending, had seen significant reductions in spending in certain parts of Asia, including Hong Kong, Taiwan and Singapore, which have been harder hit by the coronavirus than many other parts of the world.

Discover CEO Roger Hochschild said that those card companies that are most exposed to the travel and expense category will likely feel the effects of the coronavirus outbreak first. The Discover CEO also said that the card issuer had begun taking steps to prepare for a scenario in which the employees at its customer centers need to work from home.

Even before the U.S. formally went into lockdown, the pandemic dramatically changed how people handle payments.

Consumers were extremely wary of handling cash — some merchants already urged customers to pay with plastic instead, and food delivery companies like Uber Eats and Deliveroo introduced the concept of no-contact food deliveries.

Contactless cards, in turn, became a hit. By March 3, about 38% of consumers said they now saw contactless as a basic need or feature of payments, up from 30% a year earlier, according to The Futurist Group.

Arizent, the parent company of PaymentsSource, conducted a survey of its own in March, found that many customers had already changed their primary way of interacting with their financial services or fintech provider. Seventy-three percent of respondents reported customers were making fewer visits to the branch or office, 60% saw an increase in phone calls and 52% saw an increase in digital tools.