In February 2020 PayPal estimated that COVID-19 could result in a one percentage point reduction to its year-over-year revenue growth for the current quarter, according to Forbes.
However, meanwhile schools and restaurants have been closed in the US, with major events across the country cancelled and employees at scores of companies working from home. Those closures are hitting hourly workers particularly hard. If they aren’t employed by the few companies that plan to continue to pay wages during the outbreak, they have no money coming in, with direct consequences on ecommerce sales, which means less revenue for all the payment companies.
In early March 2020, Visa said it expects revenue in Q1, 2020 to be closer to the low end of its guidance for revenue between USD 4.78 billion and USD 4.84 billion. The reason was a deterioration in cross-border growth rates since the coronavirus outbreak in China.
Furthermore, Square warned decreased ecommerce demand could slow its payments business while supply chain disruptions could hurt its ability to churn out payment terminals. Citing figures from Digital Commerce, Forbes revealed that 47% of retailers polled said they expect revenue to take a hit because of the virus. More than 50% think consumer confidence will be weakened by the outbreak.
Those warnings prompted JPMorgan Chase to cut its estimates on Visa, Mastercard, and PayPal, arguing the coronavirus outbreak has severely impacted travel across borders, particularly in Asia and is slowing down ecommerce sales which will hit their bottom lines.
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