The move to a cashless society because of a pandemic

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Saturday, October 3, 2020
The move to a cashless society because of a pandemic
The global health crisis has brought a seismic shift in payment preferences where cash and coins are used less. What's led up to this, and what options are out there?

Among many changes the COVID-19 pandemic has brought to the U.S., one is a possible move closer to a cashless society.

Since more people decided to stay home when the coronavirus outbreak spread, they were spending less money. If people were out, fear of catching the virus kept them from touching many things, including loose change at the register.

As Americans made more non-cash purchases, headlines of a coin shortage followed.

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"The coins aren't getting to where they need to be," said Harvard business professor Shelle Santana.

In 2018, non-cash transactions, including debit cards, credit cards, electronic payments and checks, totaled more than 174 billion. In 2015, that number was 30.5 billion less.

"It's just faster," Santana said. "It's faster for the consumer and faster for the seller. So if your cashier isn't having to count coins in particular, then the line can move that much faster."

Unfortunately, a move to a cashless society could cause problems for some communities.

About 8% of Americans don't have a checking account. About 18% of Americans rely on alternative banking solutions, like a check cashing location, even though they have a savings or checking account. So these people rely on cash to purchase goods and services.

"For people who have the option to do this substitution away from cash to credit cards, then you're going to see that substitution occur over time," said Santana. "But there are a number of people who don't have the ability to do that substitution, and those are the vulnerable people in the community."

While convenience is a perk for using a card or electronic payment, everything someone purchases is tracked and documented.

SEE ALSO: 2 ways to cut back on spending during COVID-19

"There is incredible visibility into everything that you're spending on, and it also makes you vulnerable for potential data breaches or hacks into a system, and having your identity or credit card information stolen," Santana said.

Cash, however, protects the user's privacy and doesn't leave a footprint behind. And the fine print on every U.S. dollar is an assurance cash won't be going anywhere anytime soon.

"The legal tender in the United States is still cash," Santana said. "Every single bill that is printed says, 'This bill is good for all debts, public and private.' And that's our official currency."

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