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Is The Coronavirus Going to Kill Cash Payments?
February 1, 2021
One of the biggest disruptions from the coronavirus pandemic has been changes in how we shop and how we pay for things. The Wall Street Journal recently examined how the use of cash has fallen during the pandemic and how permanent these changes may be.
The Journal notes that some consumers have shifted away from using bills and coins in an attempt to avoid a potential source of viral transmission. The bigger cause, however, is that we are shopping digitally more, making purchases where cash is not an option. Digital retail sales were up 37% in the third quarter of 2020.
The Journal questions whether this is a temporary disruption or an acceleration of an already existing trend, noting that Federal Reserve data shows that in 2012, 40% of all transactions were cash-based, but by 2019, that percentage had fallen to 26%.
Data also suggests that the shift away from cash could boost economic activity by increasing consumer spending. The Journal cites a Deutsche Bank survey that found that 43% of Americans think less about how much they are spending when using a card instead of cash.
