Cash is out and digital is in, but can Covid-19 really send cash packing once and for all?
Money makes the world go round, but it looks like some forms of it might be on the way out.
Cash usage has long been on the wane but, by the looks of it, the Covid-19 pandemic could be the final nail in the coffin.
Within the first few days of lockdown 1.0 back in 2020, cash usage had already halved in the UK. Now, digital payment methods, like Apple Pay or Google Pay, are the most popular way to pay.
By now, most of us have dabbled in at least one digital payment thanks to the pandemic, so can cash ever recover? I, for one, am doubtful.
Even before the world went into lockdown, it was common knowledge that banknotes carried all sort of nasty things and for years those with weak immune systems have been cautioned against using cash.
A 2018 study from the London Metropolitan University found that both coins and notes of all denominations carried 19 kinds of bacteria, including the antibiotic-resistant superbug MRSA, not exactly what you bargain for when you get cash out of the machine.
In early March last year, World Health Organisation (WHO) urged people to use contactless to avoid coming into contact with potentially contaminated banknotes after it was found that Covid-19 could live on banknotes for several days.
Let’s face it, cash is (and always has been) dirty, with its grubbiness being one of the main reasons we shifted to polymer banknotes after all. If you needed any more evidence for my apparent cash-phobia, it took me nearly nine months to even get my hands on a new £20 note and I expect it’ll take me even longer to see the new £50 note too.
With contactless so popular among consumers, it’s no wonder cash usage is declining so rapidly.
Now, thanks to the pandemic you’d be hardpressed to find a shop (not that many of us will have stepped foot in one since December) or a stall in your local farmer’s market that accepts cash, while just a few years ago the opposite was more likely the norm.
More often than not, I don’t bring a wallet with me when I leave the house and would go as far as to say that nearly every single transaction I make (bar maybe a few taps of my card here and there to check it still works) are made using my phone and I’m not alone in this.
Recent data from Barclaycard show that 90 per cent of all eligible transactions in the UK were completed using a contactless payment method in 2020, with the average spend per transaction leaping up from £9.60 in 2019 to £12.38 in 2020 after the contactless limit was raised to £45.
Now, with the contactless limit at £100 and no limit for Google or Apple Pay transactions it’s no wonder consumers are favouring these payment methods.
Recent research from AmEx and YouGov shows that the pandemic has shifted the public’s attitude on digital payment methods, with one third feeling confident trying new digital methods of paying.
Despite always being told that cash is contaminated with all sorts of nasty things, many people still rely on it to live, so that begs the question of how can we protect the most vulnerable in society without cash? Well, the answer is a bit of a long one.
For starters, we can’t wipe out cash entirely, much to the dismay of the fintech world. It simply is not sustainable for us as a society to not use cash because it would widen the ever-growing gap between the richest and poorest.
There are other ways to help support the most vulnerable in society without a need for cash, however.
In Bristol and Bath, a pioneering scheme called the BillyChip helps homeless people get a hot drink or food, all without people worrying that their money will be spent in an unscrupulous manner.
Anyone going into a cafe or shop that sells things like tea and coffee and is displaying a BillyChip window sticker can buy a blue-chip which can then be given to a homeless person for them to redeem in participating shops and cafes, providing a safe and cash-free alternative to charitable giving.
On the other hand, a recent report from payment provider Square, which was founded by Twitter’s Jack Dorsey, found that while many of us have adopted cashless payments as the norm because of the pandemic, we’re not actually ready to give it up entirely just yet.
Over the past year, the number of cashless businesses using Square has risen fourfold. This time last year, just one in ten businesses were cashless, but now every five in ten businesses have got rid of cash altogether.
Similarly, customers have been favouring cash, but the switch doesn’t look as permanent as it may seem; while most of us have used a new payment method for the first time in the last year, over half of UK consumers still want cash to be an option.
As someone from a more technologically literate generation, the idea of cash sticking around just doesn’t make sense to me.
If we as consumers can adapt to digital payments and there are new, innovative ways to protect the vulnerable in society, what purpose does cash serve?
The argument that the infrastructure needed to adapt to digital payments would be too expensive isn’t even a good one.
Fintechs like SumUp, iZettle and Square charge £19, £29 and £16 (plus other transaction fees) for the most basic readers in their product lines, while Britain’s cash infrastructure costs around £5 billion a year, according to Access to Cash.
So, will cash survive Covid-19? I am incredibly sceptical as I have been living a cashless life for the last few years and see no going back now. The question now will be if other people are just as willing to go digital and never look back.