In many markets, use of cash during Covid-19 has been more robust than many expected. Despite sharp drops in use at the beginning of the beginning of the lockdowns, cash is staging a comeback, along with a recognition that it remains an important payment choice for consumers. Jane Cooper reports
Cash has been a casualty of Covid-19, and the outbreak has seen some retailers refuse to accept it.
Advocates of cash, however, argue it has been unfairly targeted, and they defend it in the face of what some describe as propaganda – a conspiracy, even – to push the public to abandon cash altogether.
The figures on cash use since coronavirus have not all been negative, however. In fact, some regions have seen increases. Mike Lee, CEO of the ATM Industry Association (ATMIA), an alliance that promotes the use of ATMs and cash, points to ATM data from Diebold Nixdorf that shows a rise in use. Transaction levels for June in the US, Asia-Pacific and Brazil were 7-8% higher than their pre-Covid levels. Meanwhile, in Europe, volumes were below the pre-Covid average, but trended upward in May and June. “This is certainly a refutation of claims that the public is abandoning cash,” Lee says.
Cash rebound in the UK
The picture in the UK also shows cash is beginning to rebound. “Unsurprisingly ATM withdrawals fell dramatically in the first few weeks of lockdown,” says Graham Mott, director of strategy at Link, the network that connects ATMs in the UK.
“Although there was a big reduction, it was possibly not as much as one might have expected, given the restrictions.” Link transaction volumes show that for the week ending 3 May this year, volumes were 23.6 million, a decrease of 57% from 55 million for the same period last year.
Values also dropped for the same week, from £2.5bn ($3.15bn) last year to £1.2bn. Despite the drop in value, £1.2bn in cash is still a significant amount to be withdrawn, points out Mott. Also, the figures since the beginning of lockdown have been steadily increasing. From 10 May onwards, the weekly transaction volumes were 23.5 million, 24.3 million, 26 million and 26.4 million – a steady increase.
“The relaxation to the lockdown didn’t seem to make much difference: the previous [upward] trajectory carried on,” says Mott.
Claims that the public has given up on cash seem to have been prompted by confused media reports. One article by a UK newspaper, which was picked up by other outlets, reported that China and South Korea had been disinfecting banknotes and that the World Health Organisation (WHO) stated that cash posed a risk in spreading coronavirus.
A later report, however, quoted WHO spokesperson Fadela Chaib as saying it had been misrepresented in the article. “WHO did not say banknotes would transmit Covid-19, nor have we issued any warnings or statements about this. 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.”
In defence of cash
A number of industry figures stepped in to defend cash. In early March, the chair of the International Currency Association wrote an open email to the WHO director general that stated:
“All surfaces can carry the Covid-19 virus or any other bacteria and virus. That naturally includes banknotes. And cards. And mobile phones. Tables. Keyboards. Doorknobs. Shopping carts. All devices, where people punch in their PINs. Elevator buttons. Handrails. Receipts. Food wrappings. The list is endless. To single out banknotes is random,” he wrote.
Christian Hawkesby, assistant governor general at the Reserve Bank of New Zealand agreed: “Cash is just one of a number of frequently touched surfaces we encounter. The same is true for any other payment device whether it’s a card, phone or watch. This reinforces the need for good hand hygiene regardless of the way you pay or accept payment,” he said in March.
Despite these calls, however, some retailers still refused to accept cash. The Royal Australian Mint said it had received “significant comments and requests for help from those who have been denied the use of cash as a means of payment. To disallow cash as a means of payment could disadvantage or discriminate against people such as those with literacy issues, on low incomes, or without regular access to phone or internet services.
“While it is not illegal to refuse the use of cash as payment, in an effort to help reduce the spread the virus, retailers may unintentionally deny people access to the goods and services they need and place an unnecessary burden on customers.”
Covid-19 has put the issue of access to cash into focus. Mott says it is understandable that retailers have wanted to limit their contact with all objects, including cash, in order to protect staff and customers.
“That is fine, as long as people have got an alternative,” Mott says. “Some people rely on cash. If they only have access to cash and they need to buy food and essentials, it is important they can still do this.”
Contactless limit rise
Andrew Cregan, payments policy advisor at the British Retail Consortium (BRC), says BRC was instrumental in securing a 50% increase in the contactless limit for cards from £30 to £45. Mott believes this did not impact cash use as contactless usually affects cash for low-value transactions. The contactless increase, Mott says, was useful so that card users no longer had to touch the PIN pad to authorise a transaction.
While the BRC lobbied for the contactless limit to be raised, it is also a defender of cash. Cregan continues: “Many people continue to rely on cash, including those most vulnerable, especially for budgeting and control purposes. Not everyone has a credit or debit card available to them, yet everyone needs access to essential goods and services. This is why all major retailers continue to accept both cash and card.
“Where retailers are taking action to protect their staff and the public, the government too should take action to tackle card companies’ abuse of power through soaring costs charged to retailers, ultimately forcing higher prices on the consumer. Our national cash infrastructure must be protected too, to ensure that it remains accessible and affordable to those that use it.”
Some of those who defend cash and aim to protect its infrastructure believe they are fighting against a strong campaign by an anti-cash lobby to eradicate it. Lee argues that it makes no sense to single out cash as a Covid-19 transmitter and asks why “anti-cash zealots are promoting this myth in the media.
“It exposes their true colours as polemicists acting on behalf of a commercial, sponsored agenda to increase fees from card and electronic payments,” he says. “The impact of this propaganda was that fear was instilled in the minds of the public, especially in April as the pandemic began to spread alarmingly, leading to a reduction in ATM transactions – a trend that began to reverse in many countries from about midMay.”
The ‘war on cash’
This is a similar view to that of author and campaigner Brett Scott, who argues there is a “war on cash”, which he describes as an aggressive top-down move that will consolidate power in the financial system.
“I see the aggressive spread of digital payments not only as an attempt to fully privatise the payments system, but also as an attempt to ‘gentrify payments’ – to tell people they are criminal or dodgy if they do not wish to be absorbed into the giant generic chain institutions of global finance.
“The payments industry – underpinned by the global banking sector – has managed to convince states that it is noble, or even humanitarian, to make ever-greater numbers of people dependent on the banking system (a system that by no means has their interests at heart), under the cry of ‘financial inclusion’,” he writes on his Altered States of Monetary Consciousness website.
Such views are strongly denied by those in the industry, particularly those who have been working on preserving access to cash and maintaining its infrastructure.
Eric Leenders, UK Finance’s MD of personal finance, dismisses the idea that there is a move to abolish cash altogether, adding: “The industry recognises that cash is a payment choice. Where consumers want to use cash they should be able to, and we should facilitate that.”
BoE, government action
If cash use decreases, it becomes proportionately more expensive to maintain the infrastructure required to facilitate it.
“As the use of cash declines, the demand for wholesale distribution also declines – that has an impact on the infrastructure,” says Leenders, adding that the Bank of England (BoE) has been carefully considering how to maintain the infrastructure and keep it economically viable.
“The industry has been investing millions in the infrastructure and would not have done that if it was not committed to cash,” says Leenders. “The government is alive to supporting the need for cash; the regulator wants to see access to cash,” he adds. Leenders also gives the example of Link’s work in ensuring that ATMs are distributed to where they are most needed.
In March, the UK government announced that it would legislate to protect access to cash and ensure its infrastructure is sustainable. And in June this year, the Community Access to Cash Pilots launched a trial in a number of UK communities to explore ways to continue access to cash.
Such initiatives signal that cash is not being eradicated, and many are positive about its long-term prospects.
Mott comments that economic turmoil tends to boost cash use, because it is useful as a budgeting tool. He points to other advantages of cash: it is tactile, you can budget with it, you can count it, you can divide, you can give it to other people – particularly if you don’t want a continuing relationship with them.
“Cash will definitely rebound. It won’t rebound to how it was before because cash usage was declining anyway, but there is still very strong demand for cash from consumers – in the short and long term,” he says.