How Coronavirus Hastened the Switch to a Cashless Society

Bank notes are an endangered species. For years, only a tiny proportion of currency has ever existed in the form of paper money, but even that small figure is being eroded with time. The trend for physical cash is one of long term decline as attitudes and consumer spending habits change. In 2019 just 23% of all payments in the UK were made with paper money, down from 58% just a decade before. Of those least likely to pay with notes, the 16-24 year age range led the way, with 25% never using cash at all.

That was before coronavirus struck. Suddenly, any surface which comes into contact with large numbers of people is considered a medical liability and a potential source of contamination.

The New Normal

Following the outbreak of the virus, the attitude towards cash at both a public and governmental level has soured. Money has always been a potential harbouring ground for germs, bacteria and countless strains of virus, but now people are more aware of that fact than ever before.

In the Guangzhou branch of China’s central branch, that fear of paper was taken to its natural conclusion as used banknotes that came from hospitals, wet markets and buses were destroyed. According to reports, industry insiders believed that the virus could live on paper for considerable periods of time. Much of the talk regarding quarantine since the outbreak has focused on people, but in South Korea the central bank began quarantining currency as well. In the US, the Fed has quarantined money returning from Asia. Treating money with high temperatures or disinfectant has also become a reality.

At first, such precautions may seem excessive, but there are some indications that caution when it comes to money is justified. For instance, one US study showed that the majority of US dollars are contaminated with cocaine. Proof positive that at some point the majority of banknotes have been up someone’s nose. In fact, most banknotes have more bacteria living on them than the inside of a toilet bowl.

Public sentiment

Already merchants are shying away from cash and encouraging people to use contactless payments whenever possible. Pay point data has shown that card payments went up by 75.3% year-on-year in the period from April 1 to April 17 and 74.4% from April 18 to May 17. While card payments have been increasing, ATMs have seen a fall in business. Cash machines saw a drop of 39.9% and 33.31% over the same periods.

It is clear that consumers have become much more wary of cash since the outbreak of corona, and that this has brought about a change in consumer behaviour. Now that habits have changed and consumers are more used to paying with cards than ever, it seems unlikely that cash will make a comeback – even in a post-covid world.