With the rise of payment platforms like Venmo and Paypal, debit/credit cards and Apple Pay, consumers have been using less and less cash each year. We often get paid in non-cash transactions with automatic deposits into our accounts and most of our daily spending involves our cards or phone.
Then COVID-19 enters the picture, and over 6 months the digital money trend has been accelerated considerably. Coronavirus has raised health and safety concerns around using cash and coins, with consumers and merchants both more eager than ever to adopt digital payment methods.
Rapyd, a global fintech organization, conducted a survey online in August 2020 to determine how the COVID-19 pandemic had impacted US consumers’ preferences for cash and digital payments. Findings included:
- 54% of consumers surveyed are concerned about handling paper money/coins as a result of COVID
- 60% plan on using digital/touchless payments instead of cash/coins in the future because of COVID
- 32% want to see paper money/coins phased out in the future because of COVID
- 45% would like to see pennies phased out/eliminated
- 30.5% want to see all coins phased out
- 81% have heard about the US coin shortage
Because digital money was already trending, when / if our world goes back to ‘normal’, it’s safe to assume that the cashless preference will continue. This is especially true when we look at the upcoming digitally native generations who are already savvy with all forms of cashless spending. Companies like Copper, a digital banking app created just for teens, recognized the need for cashless banking in the younger generation even before COVID-19 hit. Eddie Behringer, Co-Founder & CEO at Copper Banking adds that there were already factors encouraging the use of digital banking among families and kids. “Families are unable to make the 2-hour trip into a physical bank branch to open their child’s first banking account. This reality coupled with the increased friction of cash and the need for financial education for our kids is driving the need for digital banking solutions that provide digital natives the access they need to not only use money, but learn how to spend and save responsibly.”
Adding to the digital money trend are the health concerns of physically entering into stores. Brick-and-mortar stores are forced to conduct more business online as consumers are hesitant to make unnecessary outings for shopping. More and more grocery stores, restaurants, clothing stores and others are all offering contactless digital payments and curbside pickup/delivery options.
A study by Square, a financial tech company, found that between March 1 and April 23, the number of cashless businesses in the U.S. increased 23% — and globally, that’s on the low end. Great Britain saw an increase of 50% in cashless businesses, and Canada saw a 39% increase.
While the combination of the pandemic and the upcoming digital generations are certainly increasing the cashless trend, this is not to say we will ever live in a fully cashless society. This would mean that there is no more cash printed. No more piggy banks, cash in birthday cards or small cash exchanges at the local coffee shop. It’s hard to imagine that there will ever be a time where cash/coins would cease to exist, and there are plenty of reasons why physical money is still needed. We’ve certainly expedited the move towards cashless this year, but some amount of cash will probably always have a place in the economy.