Viewpoint: Covid-19, Cash, and the future of payments
Covid-19 (coronavirus) has had a huge impact on our lives and what was perceived to be normal before the pandemic, may now no longer be so as we come to terms with the long-term implications. One factor is how we treat cash. Before the pandemic started cash usage was declining in many countries, but the demise of cash was still predicted to be many years away – people still liked to use it because cash transactions are generally invisible and also because it is a familiar and trusted payment mechanism. Older people, who often do not have the same digital footprint as younger generations, also prefer it.
During the Covid-19 pandemic cash usage has plummeted in many countries, partly because of fears of that Covid-19 can be transmitted by cash, and partly because people have been locked-down at home and only going out to shop for essential items. Scientific evidence suggests that the probability of viral transmission via banknotes is low when compared with other frequently touched objects, such as credit card terminals or PIN pads. There may also be a perceived risk of contagion when using cash or non-contactless payment mechanisms due to proximity to another person.
However this pandemic could speed up the shift towards digital payments, which could open a divide in access to payments instruments, and that could have a negative impact on the unbanked and older consumers. Some central banks are urging continued acceptance.
From May to August 2020 EAST ran a poll on this topic, for which the results can be seen in the chart below:
- The majority of the respondents (50%) would use contactless payments whenever possible
- 25% are using a mix of payment mechanisms but prefer not to use cash unless they have to
- 9% are still mainly using cash
- 8% are using a mix of payment mechanisms but are happy to use cash whenever they need to
- 8% have not used cash and don’t plan to
