In an Opinion piece in the Wall Street Journal, Coronavirus Made Me Give Up Cash (paywall), author Allan Ripp discusses his relationship with cash and how the threat of catching the COVID-19 virus inadvertently led him to rethink his need for cash.
While this is just one person’s story, and his personal set of circumstances, it does fit into a larger discussion about the future of cash. Let’s face it, despite entities like the WHO and others publically stating that the chances of catching the virus from cash are very low, many people are still very suspicious of cash and its ability to transfer COVID cooties. Many retail establishments are refusing to accept cash or, at a minimum strongly encouraging card use.
The pandemic has only fueled the ongoing discussion about where cash fits into today’s marketplace. Every new payments technology that has been introduced in the past 20 years has been accompanied by prognosticators claiming that this is the technology that will result in the death of cash as we know it. Every time, they have underestimated the staying power of the greenback.
While cash usage has been suffering “cuts from a thousand knives.” Increasingly consumers are becoming more comfortable with debit cards and credit cards and the supporting technologies like contactless payments and mobile payments. Cash largely has been relegated to small transactions at places like convenience stores and fast food restaurants.
Then, along came COVID-19.
A recent post on BBVA’s website sums it all up very nicely.
“Cash usage has been on the decline for the better part of the last 25 to 30 years, dating back to the early 90s as popularity of debit cards became mainstream,” said BBVA USA Head of Retail Larry Franco. However, the trend started to accelerate significantly with the introduction of the iPhone and mobile banking and payment applications that made it easier to manage money and conduct cashless transactions. So, up to this point, there have been at least two meaningful inflection points that seem to have hastened the decline in cash usage. Now it seems as though we have another, and perhaps the most significant, accelerator: a global pandemic. ”
I tend to agree with Mr. Franco when he says that the pandemic is an accelerator the likes we have not seen before. Many people are trying to pay with contactless cards or using a universal wallet like Apple Pay or Google Pay to avoid touching cash and the POS terminal. Add that to the aforementioned issue of stores encouraging electronic payments over cash, and it is evident that cash is being marginalized during the pandemic.
Will cash rebound when COVID-19 is behind us? Honestly, it is hard to say. If I were a betting man, I would say that some of the people forced to use cards will stick with card and some people will go back to their old cash habits. The actual size of these two groups is anyone’s guess.
Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.