It’s not often that when something happens, it impacts each and every aspect of life — but in 2020, the COVID-19 pandemic has done just that. From minor inconveniences to major upheavals, no part of life has been untouched — including the payments industry.
Today, we’re discussing how the COVID-19 pandemic has intensified the war on cash.
An Ongoing Battle
The COVID-19 crisis comes at a time when cash is already under attack by those that would prefer an all-electronic payments system. As technology has driven the digitalization of many parts of the economy, some believe that cash has outlived its life cycle. This notion of cash as an outdated payment choice carries on in certain circles, despite strong evidence to the contrary.
Our 2020 Health of Cash Study showed that cash continues to play a vital role in the lives of U.S. consumers throughout the pandemic, with highlights including:
- 52 percent of survey respondents ‘strongly agree’ or ‘agree’ that “cash is as important today as it ever was.”
- Cash continues to be the most used way to pay. Over 30 days, 68 percent of consumers surveyed used cash for at least one transaction.
- Cash is the leading form of payment for transactions under $10, at 54 percent. Debit and credit cards combined only account for 31 percent of these transactions.
An Unwarranted Fear
The war on cash has smoldered for years, but the COVID-19 pandemic brought a new spin for anti-cash rhetoric.
Early on in the pandemic, news outlets, government agencies, and organizations began voicing concerns that it was possible to transmit the coronavirus through the use of cash. The misinformed notion of “dirty cash” spread quickly, as the Centers for Disease Control and Prevention recommended that retail workers “encourage customers to use touchless payment options.” At the same time, the World Bank reported on the need to adopt cashless payments for the sake of social protection.
In a jumble of misinformation and confusion, some businesses began to turn their backs on cash, banning its use for safety reasons. As we have learned more about COVID-19 and its transmission, the fear has turned out to be invalidated. Virologists have found that viral transmission across surfaces is not a primary pathway for infection while further determining that transmission through porous surfaces, like banknotes, is next to zero.
Despite scientific facts to the contrary, the idea of virus transmission through physical currency continues to be used to attack the future of cash.
For Some, An Opportunity
Those with a vested interest in seeing payments shift from cash to electronic payment methods saw the COVID-19 crisis as an opportunity to move their agenda forward. With so many misleading reports and articles promoting cash as a COVID-19 spreader, anti-cash lobbies saw this as an opportunity to advance their cause on the back of a global catastrophe.
But that’s not what is happening. As a part of our Health of Cash Check-Up – available for download – we found that over three-quarters of consumers have remained comfortable with cash throughout the pandemic.
The Bigger Picture
It is estimated that roughly 2.5 billion people worldwide do not have access to a bank account. For that sizable percentage of the world’s population, cash is not an optional form of payment – it is often their only choice. Poor communities, migrant workers, those with language barriers, and the elderly are often underbanked, relying largely on cash to access the goods and services they need.
Other consumers choose to use cash to help them stay within budget. As a physical tender, it lends itself naturally to budgeting and can help avoid debt. Cash is also unhackable, providing security for consumers from cybercrime and financial scams, serving the public by safeguarding personal freedom and independence. Additionally, cash acceptance is a must for small businesses and charities, allowing them to save on costly card processing fees.
A world devoid of cash, as some would advocate for, is a world that leaves a sizeable segment of society’s most vulnerable on the outside looking in, unable to participate in the economy and unable to improve their station in life. Cash provides financial security and financial freedom to all of society and its presence ultimately benefits everyone, whether heavy cash users or not.
Despite some claiming the pandemic has pushed us closer to being a cashless society, reports from around the world prove that people are finding comfort in cash during the COVID-19 pandemic.
In the U.K., cash withdrawals have increased by two thirds, following the easing of lockdown measures. Our Health of Cash Check-Up Study showed that in the U.S., there has been very little change in consumer payment preference compared to 2019, with cash continuing to be the most used way to pay among consumers. In Canada, cash demand surged throughout March and April. And in New Zealand, cash in circulation increased by $1 billion ahead of imposed lockdowns.
For today’s U.S. consumers, cash remains the most used payment method. COVID-19 may have created tremendous changes in our daily lives, but it has not removed cash from its place of critical importance for consumers.