Coronavirus' rush to digital doesn't preclude solutions for cash
In mid-March, SAQ, the Canadian wine and spirits retailer, asked clients to use payment cards only, which was an unprecedented restriction. We’ve seen similar moves on the part of U.S. companies – in late March, signs began appearing in and around Seattle in the windows of Dick’s Drive-In locations, stating, “In an abundance of caution, we ask that you please pay with credit or debit card if possible rather than cash.”
Cash was already coming under attack well before the current coronavirus crisis for a variety of reasons, including convenience, and less potential for corruption and tax evasion. While the overall use of cash in the U.S. is decreasing, research shows that lower-income adults are typically more reliant on cash than those in higher-income brackets. When the use of cash is discriminated against, lower-income consumers and the “unbanked” are unfairly excluded from full financial system participation.
Even in the face of a threat as substantial as coronavirus, cash is not apt to ever fully go away. It’s too deeply ingrained in behaviors and societies. Also, history has shown that people tend to hang onto and even hoard cash during times of perceived uncertainty. Believe it or not, this is happening during the coronavirus crisis – in spite of the disease’s nickname as the “dirty hands” virus, which doesn’t exactly inspire people to touch much of anything, let alone cash.
However, the current coronavirus is proving to be an unprecedented trigger point, one that will likely change the public’s relationship with cash forever. This crisis is likely to raise some interesting questions in the near future, including:
Will people be more willing to forsake their dollar bills, their euro notes, their pesos, and switch to plastic? And if so, for how long?
Will governments consider production of banknotes and coins that are easily washable and disinfected by nonindustrial means? Studies have shown it’s at least theoretically possible for coronaviruses to survive on cash, which (in the U.S.) is made from 75% cotton and 25% linen – which is sufficiently coarse and fibrous for COVID-19 to live on.
Will merchants provide self-service payment kiosks for those clients that prefer to pay with cash?
Will U.S. banknotes repatriated from heavily infected areas be “quarantined” before being allowed back into U.S. circulation? The Fed has already been doing this with notes coming back from Asia.
No doubt, fear of coronavirus-tainted dollars is now palpable in many of the most infected areas of the U.S. Some may view this as a new front in the war on cash, but it’s important to remember that crises like this often elicit the opposite response as well – making people hold onto cash. Moving into the future, coronavirus is expected to have a profound impact on the way we live, work and socialize—and it will most certainly induce changes in our relationship with cash as well. To what extent, and what forms these changes will take, remains to be seen.