The coronavirus appears to have sparked the start of a cashless society as fears the virus is being spread through notes and coins has led to many businesses only accepting contactless payments.
A global cashless society already seemed inevitable as a result of the widespread and increasing use of tap-and-go payment channels and digital transactions. But due to the COVID-19 outbreak, this way of life could be introduced a lot sooner with many vendors now refusing to accept cash payments.
WHO claims its coronavirus warning was “misrepresented”
According to an article by UK newspaper The Telegraph, the World Health Organization (WHO) said people should use contactless payment options where possible and wash their hands after handling cash “because infectious COVID-19 may cling to the surface for a number of days”.
The newspaper claimed the Bank of England also acknowledged banknotes could “carry bacteria or viruses”. However, WHO spokesperson Fadela Chaib told media the organisation was “misrepresented”, asserting it “did NOT say that cash was transmitting coronavirus”.
“We were asked if we thought banknotes could transmit COVID-19 and we said you should wash your hands after handling money, especially if handling or eating food,” the spokesperson said Nevertheless, more businesses – particularly in the hospitality industry – have been switching to “cash-free” operations in a bid to prevent the spread of the virus.
Small Caps also made the prediction in a recent video interview with investment analyst Rod North that governments would use the coronavirus pandemic to their advantage to start the transition to digital currencies among passing draconian laws on its citizens.
Going cashless already inevitable
Cash has already been on the decline for some time with several countries slowing phasing out certain notes from existence. Australia is one such country that floated the idea in 2016 of removing the $100 note from circulation, citing the need to crack down on the black economy that has enabled billions of dollars of unpaid tax to fall through the cracks.
Also floating a recent plan to ban cash transactions over $10,000 in Australia, of which there are many implications on citizens. Meanwhile, China’s central bank has been looking to bring in a full digital currency system including a digital token that will presumably be swappable with the current Yuan currency.
In the US, the House Democrats this week offered a US$2.5 trillion coronavirus stimulus bill that, if passed, would establish a digital dollar.
Central banks in other nations including South Korea, Canada, Russia, Saudi Arabia, United Arab Emirates, Singapore, Switzerland, as well as the European Union, have also been exploring the advantages of a digital currency.
Cash transactions stats in Australia
According to the Reserve Bank of Australia, 37% of participants in a 2016 survey made consumer payments in cash, compared to 69% in 2007. The RBA said in 2019 that “the share of cash transactions is likely to have declined further since”.
Further data from the central bank showed the number of ATM withdrawals in Australia has been falling by an average of 5% per year since 2013; in 2018, it was about 35% below its 2008 peak. It also said about 525 electronic transactions per person were made in 2018/19 – more than double the average number of transactions a decade earlier.
“The reduced use of cash for transactions over the past decade largely reflects consumers preferring to use debit and credit cards for their in-person payments, including for lower-value payments,” the RBA stated in its Payment System Board Annual Report 2019.
The pros and cons of going cashless
Advantages of going cashless include the ease of carrying a small bank card or paying with your smart phone, as opposed to carrying wads of cash in your wallet – which is also a security risk. Nowadays, the process of transferring money across online accounts is also much quicker and simpler, especially if needing to access funds abroad.
In addition, digital pay-as-you-go solutions using platforms such as AfterPay (ASX: APT) and Zip (ASX: Z1P) are rising. For governments, a cashless society can reduce money laundering and tax evasion due to the paper trail. On the downside is the loss of personal freedom and potential surveillance.
Personal data can be vulnerable to breaches if an account is hacked into, and authorities have the ability to cut you off from the financial system or take your monetary assets for many reasons. Access to your money is also dependent on technology operating efficiently, with risks including outages and downtime. In addition, the tangible practise of carrying cash means some budget-conscious consumers find it easier to keep tabs on splurges – no cash in your wallet means no takeaway coffee for you.