Despite the alarming panic and wreckage caused by Covid-19 and the irrevocably changed world, the financial growth has continued for an array of companies providing services in payment systems like the London based Fintech Startup PayQ, offering peer-to-peer lending, equity crowdfunding and High-risk merchant account.

Fintech connoisseur Shibabrata Bhaumik says, “Making predictions at such uncertain times of crisis is a mug’s game. However, for the coming few months, consumers may forego big-ticket retail purchases, but may go for reasonably priced indulgences, or what is called as ‘Lipstick Effect’. It’s an economic barometer that can indicate how consumers might behave amid a bruised economy. Consumer will show a tendency to compensate by buying more high-end versions of lower-priced items. There may not be enough on the card to buy the Prada dress, but consumer will still feel good about buying those modestly priced Chanel cosmetics.”

The Lipstick Effect occurs during a financial slowdown or economic downturns when consumers continue to spend their money on small indulgences during recessions. They may not have enough to spend on big-ticket luxury items. However, most still manage to spend the money to purchase small luxury items, such as premium lipstick. The Lipstick Effect has been invariably experienced in markets during economic depressions, and now should be no different for the coming few months at least, he says.

The interesting learning from the lipstick analysis is that even during a downturn, brands that families trust are not jettisoned. In fact, they end up being treasured and looked at with more love and nostalgia. But in troubled times, such brands need to remain visible.

The “Fintech Chanakya” Shibabrata simplifies further, “As a result of the Lipstick Effect, the lady of the house will always show loyalty to a loved brand on an occasion like a family anniversary dinner and is likely to pick Amul Mawa Malai or Caramel Cookie at Rs 400 a brick as opposed to the usual vanilla at Rs 250. Such small indulgences are meant to make the family happier. Thus, in times of economic distress, good brands can actually expect to up-sell, despite the strong headwinds.”

With an increase in the number of digital transaction and social distancing rules in place, Fintech Companies are gently pondering their portfolios. Shibabrata Bhaumik, the founder of PayQ and The Fintech Guru says, “Online Payment System is seeing a multi-year acceleration to digital banking, digital finance, and digital commerce. There are a lot of reasons why Fintechs are seeing increased usage amid the pandemic. People can no longer transact with cash so they are turning to peer-to-peer and digital payment platforms to send money to friends and family and with social distancing rules in place, Fintech Companies are booming like never before.”

Fintech futurology is a judiciously harmless profession; investors and sages could meander along expansive avenues of opportunity, gently pondering their portfolios, window shopping and occasionally diving in to snap up the latest trends.

Shibabrata Bhaumik explains the simple epidemiology of payments and his expansion plans for his award-winning start-up PayQ.  He says, “PayQ have recently extended their operations in Asian countries in Q1 and Q2 of 2020 and have seen a usage surge. We have also stepped up ourselves by offering peer-to-peer lending for existing and new merchants whether it’s small businesses that need help against COVID-19 as a relief funds or existing Big Merchants who want access to their stimulus checks earlier. We are committed to helping small businesses, advance their potential and get them geared up and reestablish them back to the market.”