Has COVID Signalled the End for Cash?

The rise in online shopping during the pandemic delivered a corresponding decline in the use of cash. Will the COVID-effect be permanent, or will societies be reluctant to forever give up on physical currencies? Leading global e-wallet STICPAY’s Customer Service Director James Bay, thinks the use of cash is coming to end thanks to COVID.

He said: “In 2010 50% of all payments made in the UK were cash and just one in six payments were made with debit cards. By the end of 2017 debit cards were used for more than one in three payments in the UK, so the decline of cash was already being seen. However, the social distancing measures and lockdowns necessitated by the COVID pandemic, have accelerated the move to digital payment methods.

“With many physical businesses being shut for long periods of time, much of our shopping has moved online in the past 18 months, and that has inevitably led to an increase in debit/credit or digital payments. In fact, according to Link, which runs the UK’s cash machine network, the volume of ATM transactions fell 62% year on year at the start of lockdown.

“In Spain the picture was even more stark, with cash volumes dropping by up to 90% during lockdown.

“With many of us getting used to online shopping and other payment methods that don’t involve cash, it is unlikely that we will return to paying for goods with physical currency any time soon.

“Experts had predicted that we would become a cashless society in the next 10-15 years, but that move is likely to have been accelerated by COVID and the milestone could even be achieved in the next year or two.

“And it is easy to see why this would happen. Contactless or digital payments are much less likely to spread germs or viruses and they make social distancing rules much easier to maintain. As we start to reopen our economies, these measures will become even more important to allow us to continue to operate some sort of normal life.

“Small and medium sized businesses who may not have accepted digital payment solutions prior to COVID have been forced to during the pandemic and many are finding it something they prefer. As well as being more hygienic, digital payments are also much easier from an accounting point of view and anything that removes an administrative burden from a small business will always be popular.

“Not having physical cash on the premises also removes the possibility of stores being raided for the money in the till, which is something that is still a major concern for many small businesses.

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“But as our finances become ever more digital, we present hackers with more opportunities to gain access to our funds. That is why choosing a payment solution that has high levels of security is vital.

“Digital money transfers also make life potentially easier for international criminal gangs wishing to launder large sums of money. Again, the payment solution and its security protocols are crucial if we want to stop the flow of illegally obtained funds.

“When using an e-wallet the user’s sensitive financial data is always protected, whether it is being used for in-store purchases via a smartphone or for online payments. E-wallets have a layer of advanced encryption that generates a random number sequence for each transaction. Even if hackers manage to intercept the customer’s transaction, they won’t be able to use the data they acquired.

“And stealing the phone used for the e-wallet won’t help the hacker either. They wouldn’t be able to log into the digital wallet account as it is protected with biometrics (face recognition, fingerprints), a PIN, or a password.

“When you consider the benefits of digital payments it is easy to see there are many reasons why they are a better option than cash. COVID may have accelerated our shift away from cash, but it is a shift that was inevitable.”