Pandemic May Accelerate Use of Contactless Payments
Coronavirus Fears Make People Wary of Cash
Despite reports from health experts that say the risk of contracting coronavirus from cash transactions is small, contactless payments have increased across businesses around the world since the beginning of the pandemic. People are taking extra precautions with coins and bills, from sterilizing them with UV light, to spraying them with disinfectant, to microwaving bills in the belief that it kills the virus.
Hard currency used to be something dependable, particularly in times of uncertainty. But in recent years, cash transactions have been dwindling as internet shopping and app-based payment alternatives become more ubiquitous. Fear of spreading the virus is pushing businesses even further in this direction.
Some Countries Have Already Moved to Cashless Economies
In some parts of the world, contactless payment has become the norm. For example, the UK and Australia are slowly phasing out hard currency. The rise of app-based payments in China is causing cash transactions to plummet there as well.
Countries transitioning to cash-light societies, such as Canada, Norway, Sweden, and Finland, claim to have an easier time identifying nefarious activity, like money laundering and drug trafficking, because large cash transactions are less common there.
The coronavirus pandemic has reignited the debate about whether cash will be a practical way to handle transactions in the future. Proponents of fewer cash payments point to reduced risk of robbery and simpler transactions as a boon for businesses. Additionally, some economists say that central banks could more easily impose negative interest rates to help avoid recession in a cashless society.
Cash is Still (Mostly) King
Though coronavirus concerns could speed up the transition to cashless societies, a world without hard currency is a long way off. People have an emotional connection to money—it is, after all, both a status symbol and a tangible gauge of a day’s work. In fact, the Bank of Japan estimates that 53% of a Japanese households’ assets are in cash. In parts of Germany and Austria, the saying “Cash ist fesch!”, meaning “Cash is beautiful!”, is common. People young and old are attached to hard currency. According to the German national bank, though, cashless transactions have increased significantly in the past couple weeks.
In other parts of the world, cashless transactions simply aren’t feasible. Iran cannot access international bank cards due to US sanctions, yet some Tehran shops are still insisting on debit card transactions. In Lebanon, economic and political crises last fall led to people withdrawing tons of cash over fears the central bank would collapse. Sales of home safes spiked in tandem with the cash withdrawals.
In Venezuela, where inflation is through the roof and the local currency has lost its value, crafts made from bolivars fetch more than the actual notes are worth. In Central and West Africa, high banking service fees have people keeping their cash at home. The cashless movement can only go so far before it reaches obstacles in cities and countries across the globe. That said, as with other cultural shifts that have been accelerated by the pandemic, like remote work and telehealth, more people are thinking twice about paying with cash.
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