COVID-19 shines light on e-commerce– WTO Report
The World Trade Organisation (WTO) in recent report noted
that e-commerce is flourishing in the wake of the COVID-19 and the accompanying
measures to forestall its spread which include lockdowns.
The report noted that one of the most significant segments
of online purchasing by value, tourism and travel has plummeted as a result of
the COVID-19 pandemic for obvious reasons.
In March, for example, 30 per cent of US consumers reported
delaying vacations and 25 per cent delaying flights.
In this environment, e-commerce by tourism-related
purchasing platforms has likewise fallen. For example,the holiday accommodation
rental platform AirBNB has experienced a dramatic reduction in customer
traffic.
However, spurred by social distancing and stay-at-home
requirements, e-commerce in services that can be delivered electronically has
flourished, with demand rising sharply. While it may be a short-term phenomenon
that might not last beyond the current crisis, as with online shopping,
longer-term shifts in customer habits could potentially make businesses and consumers
more accustomed to consuming online services in both work and personal
settings.
One example is media services. Facebook reports that its
online messaging, voice and video call services are up by more than 50 per
cent, with Italy showing a 70 per cent surge overall, and a 1,000 per cent
increase in group calls. Spain’s Telefonica has seen an increase in IP (i.e.
internet protocol) and mobile data traffic of 40 per cent and 50 per cent,
respectively. Thailand reported an 828 per cent rise in data traffic from Zoom
Video Communications and a 215 per cent spike on Skype video conferencing.
Both companies and governments are moving to address
capacity constraints and facilitate consumer access. Some publishers have, for
example, made COVID-19-related content freely available online. In addition,
social distancing measures have dramatically boosted the demand for audiovisual
content; and, as consumers cannot attend cultural events physically, content is
being brought online. For example, a number of opera and concert houses have
chosen to offer free online streaming of their repertoire.
The considerable increase in demand for these digital
services, as illustrated above, has led to an equivalent increase in data
volumes which, in some cases, has strained the telecommunications
infrastructure. In order to ensure continuity of service, Netflix and YouTube
have reduced video quality to alleviate network congestion. In India, this move
by Netflix has reduced its network traffic by 25 per cent.
In the financial sector, some mobile phone companies have
moved independently to reduce their fees on mobile payments, and these moves
have been complemented by governments in an effect to discourage the use of
cash.
Many central banks have lifted some of the restrictions and
requirements applied to e-payment systems, particularly in Africa, where mobile
payments are common. Ghana, for example, agreed to alter policies for mobile
money transactions for a period of three months; smaller withdrawals will not
carry a charge, and transaction limits and balance levels have been increased.
Rwanda has removed fees on all mobile money transactions, with increased daily
and monthly limits depending on the type of user.
Following discussions with Uganda’s central bank, mobile
providers of payment services announced temporary measures that included
removing fees for lower-value transactions, and certain providers will make
mobile wallet-to-bank transactions cost-free. Kenya introduced similar
temporary measures, such as increasing daily transaction limits and suspending
fees for transferring funds between mobile services and banks. Egypt has raised
contactless payment limits and reduced costs of mobile cash transfers.
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