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Electronic Payments and Disaster Situations: Hurricane Ida

Categories : Cash and Crises, Cash does not require a technology infrastructure, Cash is a contingency and fall-back solution, Cash is a public good
December 15, 2021
Tags : Card payments, Cash and Crises, disaster recovery, Humanitarian, US
Hurricane Ida hit Louisiana in August, 16 years after Katrina. The financial and electronic payments infrastructure shut down due to power outages, leaving cash as the only functioning payment instrument.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – South America, University of Oxford

This post is also available in: Spanish

Hurricane Ida made landfall in south Louisiana on August 29, exactly 16 years after Hurricane Katrina devastated Louisiana and Mississippi. In 2005, Katrina flooded New Orleans, causing 1,800 fatalities and $125 billion in damages. After Katrina, the city invested $14.5 billion to improve its flood protection infrastructure.

Although New Orleans’ levees resisted Ida’s landfall, the storm still caused havoc. The power grid failed in Mississippi and Louisiana, leaving more than 1 million customers in Louisiana without electricity during a heatwave. Power outages lasted weeks in the hardest-hit areas.

The storm caused catastrophic wind gushes, floods and tornadoes in several U.S. northeastern states. On September 1, New York City registered the wettest single hour on record, at 3.15 inches (80 mm), prompting the authorities to declare its first-ever flash flood emergency. Dozens died across the United States.

Financial Infrastructure Shuts Down

On August 27, in preparation for Ida’s arrival, Stanley M. Dameron, commissioner of the Office of Financial Institutions of the State of Louisiana, authorized financial and non-depository organizations to temporarily close or relocate branch offices, as well as limit hours, reduce functions, or close certain days of the week.

Bank Closures

Failures in the Electronic Payments Infrastructure Increased Disaster Risks

In New Orleans, some supermarkets like Whole Foods accepted debit or credit purchases only and refused to provide cashback to customers. Other retailers like Dollar General, restaurants, hardware stores, and pharmacies remained open but accepted cash payments only.

During the Covid-19 pandemic, Louisiana had about 930,000 people needing food assistance. However, “layer on top of that, all those people that are normally food secure but have no power and no ability to shop and buy groceries and you’re talking a million-plus people in the state that need help,” said Natalie Jayroe, president and chief executive of the Second Harvest Food Bank.

Always Have Cash Ready in your Emergency Kit

Local bankers thought the recovery would depend significantly on restoring electricity and water services. “Having lived through this a few years ago, the restoration of infrastructure is key,” said Art Stevens, president of retail banking at Trustmark Bank in Jackson, Mississippi. “The roads have to be cleared and opened, the power has to come back on, the water and sewer has to work, really before full recovery can even start to take place.”

U.S. federal disaster preparedness advice at Ready.gov recommends citizens have a basic supplies kit including “cash or traveler’s checks.” The Federal Emergency Management Agency (FEMA) also urged New Orleans residents to stock up on cash in preparation for Ida’s landfall.

This post is also available in: Spanish

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