The demise of cash has been getting closer for a while and it looks like COVID-19 could be the tipping point. Concerns over how hygienic cash is follow concerns over another type of dirty money. Cash underpins much crime.
According to the University of Edinburgh Centre for Statistics, “The majority of banknotes – from the £10 note in your wallet to the cash you withdrew from the ATM at the weekend – have traces of cocaine on them.” How much of the cash that passes through your hands has been tainted by crime during its life? According to Ken Rogoff in his book ‘The Curse of Cash’ “more than a third of all US currency in circulation is used by criminals and tax cheats”.
Figures released by Link indicate the value of cash withdrawn from Link ATMs is around half the level it was two months ago. Whilst people of course have fewer places to spend cash, it is still a staggeringly swift collapse. Post COVID-19 some will go back to cash, however once consumers have experienced the convenience of contactless payments and even more so mobile handset payments, like Apple Pay, many will stick with the ease of cards. And having been reminded how dirty cash is, how many will really want to touch it again?
With fewer customers using cash, more shops will decide accepting cash just isn’t worth the effort. The cost for shops of taking cards often gets cited but cash is expensive to handle – shops need to factor in the cost of counting, banking, security as well as the question of hygiene. For some retailers who’ve stopped taking cash, it will be temporary, but for others it will be a reminder of the benefits of going cashless and will stick.
It’s often argued that cash gives consumers greater control and allows them to budget better. You can see how much you have to spend at any point in time when you have cash in your wallet, however you can’t see where you’ve spent it. But if you use a ‘fintech’ digital bank like Monzo, Starling or Revolut, their apps provide immediate visibility of each transaction and exactly where you’ve spent it. You can track your expenditure over time by merchant and category and decide if you should adjust your spending patterns.
The move from cash to digital puts a responsibility on banks to ensure everyone can open bank accounts, even if they have no credit history. Adopting smart digital identification and verification technology is a key enabler in this process via a blend of digital data and document verification.
Cash won’t disappear completely just yet but we are moving ever closer to William Gibson’s vision in his book Count Zero:
“He had his cash money, but you couldn’t pay for food with that. It wasn’t actually illegal to have the stuff, it was just that nobody ever did anything legitimate with it.”