UK Edition
Cash has been on the decline in Britain for some time. By the end of the decade, coins and notes could account for just one in ten transactions, according to a Government-commissioned study published last month.
The reasons for this decline are obvious. The convenience of contactless and mobile payments has all but confined cash to a marginal payment system. But a new element has entered the fray that may hasten its demise; hygiene.
As coronavirus continues to spread across the UK, more businesses are switching to “cash-free” operations in order to help stem the spread.
High street retailer Ted Baker said that it was doing just that in an email to customers on Friday. Stalls within Borough Market in London have erected signs insisting they’re only accepting contactless payments. So too has Costa Coffee.
Amy Gavin, a researcher at financial services consultancy 11:FS, says the growth in smartphones and online banking has been a key driver in society’s shift away from using cash.
“A cashless society brings advantages for both consumers and businesses on a number of levels,” she says. " [But] coronavirus brings a new dimension to the benefits case: physical wellbeing. One that is likely to change consumer spending habits for good.”
Gavin says digital payment tools like iZettle and PayPal that allow businesses to accept electronic payments are now likely to grow “at pace” as customers look for contagion-free methods of payment, but that this could affect vulnerable parts of society.
“The real crux of the cashless society debate is not about personal preference, it’s about the fundamental importance of fairness and inclusivity. Those groups include rural communities without access to reliable internet and mobile coverage; the unbanked; the elderly; those with physical or mental health issues who struggle to handle cash, as well as people with a history of debt problems.”
Many of these face the risk of being excluded if Britain moves too quickly towards becoming cash-free.
“Ensuring that the benefits of digital banking and electronic payments are well-understood must be a priority for governments and banks to ensure that people become more comfortable with using less cash in their day-to-day lives and avoid getting left behind,” Gavin says.
But some argue that cutting out cash to fight coronavirus will have little, if any, effect on tapering the spread of the deadly disease.
The World Health Organisation has yet to issue coronavirus-specific recommendations on the use of cash. Instead it has encouraged people to wash their hands after handling it. More broadly the WHO has suggested that cash can carry high levels of germs and pose a risk of infection more generally.
Infectious diseases can live on inanimate surfaces like metal, paper, and plastic for hours but early indications from the University of Michigan suggest that coronavirus is mainly contracted by inhaling particles that someone else has coughed or sneezed into the air.
Elsewhere a study from the National Institutes of Health in the US found that the virus can live for up to four hours on copper and up to a day on cardboard. Researchers used aerosols containing Sars, one of the last major coronaviruses, and sprayed it onto surfaces to monitor how long it could live on them.
Despite the uncertainty around the dangers of cash and coronavirus, many businesses have decided to shun it for the time being. That said cash loyalists may soon return to physical currencies once the pandemic is curtailed.
“I think it will certainly accelerate the demise of cash,” says John Cronin, a financials analyst at stockbrokers Goodbody.
“But it won’t eliminate it altogether. Memories are short, I would draw parallels with how quickly the banks went back to risky lending after the financial crisis. Also people will feel more comfortable again once this is over and go back to interacting in the same way they have done in the past.”
Cronin says that a certain level of “behaviour change” will remain, but that some elements of society will stick with cash.
The independent Access for Cash Review also found that the demise of cash is still some way off, suggesting Britain was on course to be virtually cashless by 2035.
Much of the demise has been driven by an attitude change from consumers matched with a slump in the number of ATMs across the country. More than 115,000 people across 130 postcodes now cannot access a cash machine at all, according to research from consumer group Which?
Banks across the country have also shut 1,203 outlets since January 2018 –making access to cash even more limited.
Covid-19 may not sound the death knell for cash but it may force the country’s more vulnerable currency users into adopting modern technologies more quickly.