THE IMPORTANCE OF DIGITALISATION IN PAYMENT SERVICES DURING THE COVID-19 CRISIS

Lockdowns connected to the COVID-19 crisis, among many other issues, significantly impacted the distribution of goods and services worldwide. For that reason, digitalisation was pointed out again, this time more than ever, as an essential factor of successful distribution of services in specific and challenging market conditions. Payment services and distribution of other financial products and services were among many different areas under the strong influence of such circumstances. Although the Republic of Croatia's payment system went through reform and is a part of SEPA, the disruptive environment emphasized the importance of swift reactions in implementing corresponding technological solutions. Innovations in financial services distribution, in this case, payment service, have a crucial role in ensuring a stable environment for performing payment transactions within set deadlines. This paper aims to present how the lockdown in the Republic of Croatia impacted payment services distribution and emphasized the importance of digitalisation. For that purpose, different payment transactions and service trends are analysed. The paper's primary goal is to point out the role, advantages, and further possibilities of financial services distribution, mainly cashless payment services, in a stressful time for financial, macroeconomic, and other areas caused by the sudden and unpredicted COVID-19 crisis. In the empirical research part, the comparative analysis and descriptive statistics methodology are applied on available annual data for 2014-2019 and monthly data for cashless payment services in the Republic of Croatia for the period 1/2019-6/2020. The analysed data consist of statistics on the number and value of national and international payment services, including cash withdrawals and deposits, credit transfers initiated by a paper-based order or electronically, standing orders, direct debits, and payment transactions using payment cards, and issuing and acquiring payment instruments. Additionally, the analysis covered the payment system infrastructure. The results of the study on an annual basis show that the number of national credit transfers has a continuous and significant growth trend. At the same time, the values of transactions achieved growth from 2017 onwards. When observing monthly data in the period 1/2019-6/2020, the number of paper-based consumer credit transfers and the total of non-consumer ones recorded minimum values in 3/2020 and 4/2020. On the other hand, in the same period, the number of consumers' electronic mobile-phone transactions achieved their maximum. Also, national credit transfers' values recorded their maximums in 3/2020, where Internet and mobile-phone transaction components can be pointed out as the most meritorious. These results emphasized the importance of well-developed and technologically thriving payment services distribution that enabled the payment system's safe and stable functioning. With an appropriate and contemporary regulatory frame, which anticipates customers' needs, the national supervisory authority can quickly react to market changes and encourage the upgrade and development of consumer-tailored payment systems and services. The results of the analysis may be a valuable source of information used for a better understanding of the importance and the role of innovations and digitalisation in the field of financial service distribution.