Is fintech ready for coronavirus?
The coronavirus outbreak is having a wide range of side effects, from pasta shortages at U.S. grocery stores to a rise in stock prices for video-conferencing companies. The ripples could reach far-off distances and unexpected industries, including financial technology.
If people aren’t traveling due to virus fears, they’re spending less on their credit cards. Visa and Mastercard have warned investors that sales will fall short of their expectations in the current quarter by 2% to 4%. Visa has already seen a “sharp slowdown” in its cross-border business, especially travel-related spending. Their stocks have dropped about 12% since the market’s peak on February 19, compared with a 10% stumble for the S&P 500.
If the virus starts spreading more quickly in America, consumers will dine out less and think twice before shopping at stores where cashiers interact with hundreds of customers a day. That means Square, which helps small businesses accept credit card payments and makes money on transactions, could be affected negatively. It mentioned the coronavirus as a potential business risk factor in its 2019 annual report. While just five percent of its revenue comes from outside America, 65% of that is on transaction fees that could fall quickly if the epidemic escalates here. Square’s stock has slipped 9% since February 19.
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