Cash is a contingency and fall-back solution

The use of cash fell substantially in the early days of the Covid-19 pandemic with the acceleration in online shopping and contactless payments – but cash usage has bounced back as lockdown has eased. Long-term prospects for retail payments remain uncertain.

With the coronavirus pandemic moving past the six-month mark, one of the first notable side effects was a reduction in the use of physical greenbacks. The cash-out had several drivers: Most retail stores were closed or saw their operations greatly reduced, virtually all bars and restaurants that remained open could provide takeout service only, almost everyone who was able to began working from home, and online shopping from Amazon and other home-delivery options boomed.

According to the recently published Annual Report of the Reserve Bank of India, cash in circulation grew by 14.7% in value and 6.6% in volume between March 2020 and March 2019.

The IBDA and CashEssentials have been joined by other industry organisations - including ATMIA, BnEI, IACA, ICA and Reconnaissance International - to develop an initiative to support global recovery post Covid-19 by bringing together all actors in our community. They are calling this initiative, ‘HUMANIA’ but the project name will be confirmed upon launch of the initiative in September 2020.

For countries emerging from conflict like Ethiopia, digital payment systems are a tempting way to extend control over the people. Do Ethiopians want their government to have complete and absolute control over every financial transaction they make or would they prefer to retain the financial resilience, privacy, freedom from exploitation, and protection from poor governance which cash offers them?

Despite the scale of the Covid-19 pandemic, the payment system has weathered the storm; no systemic outages of core payments infrastructure have been reported. Payments systems - cash and non-cash - have proved resilient and robust and have continued to enjoy trust from the general public.

A survey shows that the majority of Spaniards view access to cash as important in times of crisis. Meanwhile the government is proposing to lower the limit on cash payments and advocate its elimination altogether.

As in other countries, Australia has seen an increase in currency demand and a decline in cash payments during the pandemic. The Reserve Bank is considering policy options to ensure competition and resilience in the payments market. This could lessen the profitability of retail payments.

Age UK is deeply concerned that the headlong rush towards a cashless society is leaving some older people unable to pay their way. It joins a growing number of associations around the globe calling for universal access to cash.

Cash – physical currency – is a vital public good whose social utility in times of crisis deserves to be better recognised. It is time for aid agencies to protect it. The health of vulnerable populations around the world – the people international aid agencies exist to protect – should not be put at risk by advising them to use only cashless forms of payment or systems which are not disaster-resilient. In fact, to do so goes against the humanitarian principles of ‘do no harm’.

The Consumer Choice in Payment Coalition reminds the public to be fully and accurately informed, and not misled by unfounded fears surrounding the use of cash versus other payment methods.

As the Coronavirus pandemic spreads around the globe, it is changing the way we interact with others and the way we transact. Social distancing, confinement measures, closures of shops and restaurants are changing the way we shop and pay. This article aims to review how central banks and the media have been reporting on the impact of the virus on cash and payments and what lessons can be learnt.