Will the Coronavirus Mean the End of Cash?

CC BY 2.0. sign at Primrose Bagels/ Lloyd Alter

People are worried that it might carry the virus.

Nobody wants to touch cash these days; every store that is open has a sign "credit or debit only." It was bad enough when all we had to worry about was cocaine or feces. American money was always the worst, with so many low-value bills, so much dirty old paper. All the British, Canadians and Australians had to worry about with their plastic money was yucky beef tallow.

But now, with the coronavirus about, nobody wants to touch the bills. According to the Bank of England and the World Health Organization, "The risk is no greater than on any other items," but their smallest note is £5 and they are plastic. The Bank of Canada wants retailers to keep taking it, saying "refusing cash could put an undue burden on people who depend on cash as a means of payment.” The Bank of China is disinfecting money and storing it for 14 days before recirculating it. The Central Bank in South Korea burned it.

My stash of dirty foreign money

My stash of dirty foreign money/ Lloyd Alter/CC BY 2.0

According to CBS News, American health officials are more cautious.

"Droplets can live on surfaces, including subway seats and dollar bills. It seems like it could be a path for transmission because it's something people commonly share and handle," said Dr. Jeffrey Shaman, professor at Columbia University's Mailman School of Public Health. As a result, some public health experts are recommending that the public avoid handling cash entirely and instead pay for goods and services with credit cards or contactless modes of payment when possible. "Credit cards are personal, so no one touches them [in many retail transactions] other than the owner," Dr. Maggirwar said. "Cash exchanges hands and you never know how far that particular bill as traveled."

Meanwhile, in Germany...

Record store in Berlin

Record store in Berlin/ Lloyd Alter/CC BY 2.0

For most people, in this era of contactless payments and Apple watches, this is not a big deal. For the poor, the young, and others who do not have credit or bank cards, this can be a real hardship. In other countries, it is a major change. In Germany, many restaurants and stores don't take credit cards; when I arrived in Berlin I got in a cab and was shocked to find that we had to stop at an ATM, as he was cash only. Germans apparently don't trust cards; according to DW, reasons range from "the collective folk memory of painful historic events such as the severe hyperinflation in the Weimar Republic era, to an intense desire for privacy and a distrust of any form of surveillance."

"There is a hesitance to get rid of cash and there is a general suspicion among the German population that getting rid of cash is, in some way, getting rid of a part of your freedom," Professor Dorothea Schäfer from the German Institute for Economic Research told DW.

But they are getting used to it right now. According to a more recent article in DW,

With social distancing rules and the fear of spreading COVID-19, signs are popping up in restaurants and shops asking customers to pay electronically — if possible with a contactless card — to avoid close contact while exchanging cash...It is not just businesses that are concerned. A lot of shoppers are also less willing to handle cash.

But they have many of the same problems that we noted earlier: "Older people, the poor, those without bank access and those who are simply offline will be left out." That's why the Bank of Canada still thinks cash has a future, according to John Lorinc in Macleans:

The Bank of Canada’s official view is that notes and coins are inexpensive (no transaction fees), easy to use, provide privacy and security, and are always viable in emergencies (e.g., a massive blackout). It also notes that while 99 percent of Canadians, including the very poor, have bank accounts, many are “under-banked” (bank fees are so high they tend not to use plastic).

Will the coronavirus kill cash?

pocket change

Pocket change/ Lloyd Alter/CC BY 2.0

Will this change after the pandemic? It is likely to. Cashless transactions are very quick and convenient for those who have money or credit, even more so if you have an Apple Watch. A lot of retailers aren't interested in you if you don't. People who previously used cash for small purchases like their cup of coffee are now paying with plastic. People who handle food and coffee should never have been dealing with dirty dollars in the first place. People may be reticent about handling money. People like me are getting really tired of collecting all that change. And people are really getting used to it; Nancy Skola of Politico talks to the head of Paypal:

PayPal’s Schulman sees all of this as part of a coming shift: Every transaction that we choose to do virtually instead of with cash builds up our muscles for the change, getting us comfortable with never touching that Alexander Hamilton bill again.

Or it could go the other way when people are poorer and less secure. It's easier to track what you have when it is in your pocket or mattress. As Timothy Rooks wrote in DW: "In times of crisis, people like things they can trust. Things they can hold." There is something to that.