Is the Coronavirus Killing Off Cash?
Is the Coronavirus Killing Off Cash?
By Nancy Scola Politico April 17, 2020
Stores are shuttering all over the United States, and many of those still open are balking at cash. Shoppers are switching orders to Amazon and Walmart.com. Many restaurants that have stayed open won’t take cash, and operate without any contact at all, requiring customers to pay first online.
What once seemed like the oldest, most reliable way of paying now seems fraught: A physical object changing hands, bringing people closer than 6 feet, covered in who knows what.
“Do I want to grab the thing that you were just holding in your hand? No,” says Harvard economist Kenneth Rogoff, who has advocated for a less-cash society, and predicts the crisis “is absolutely going to drive people to prefer credit and debit to cash.”
Or, as one Twitter user, @DonGone5 put it last week, “Still no cash accepted. $10 dollar bill now been in my wallet so long, Alexander Hamilton has shot himself.”
Filling the void, in many cases, are digital payments that are quick, clean and easy. That sudden shift is a huge opportunity for tech firms such as online payments giant PayPal, which also owns the Venmo app.
CEO Dan Schulman says the company is seeing the number of new customers setting up accounts each day “basically double” from prepandemic rates. Square, the digital payment company run by Twitter CEO Jack Dorsey, has found itself fielding calls from merchants whose customers no longer want to touch any surfaces.
Some of the change might be temporary. And some might not—which has Silicon Valley excited, and others worried.
For years, tech companies have been pushing toward a more virtual, less cash-based payments system, and pressing regulators to free them from the restrictions that govern traditional banks. Now, in the U.S., the government has been moving in this direction of its own accord, discouraging paper checks in a rush to get stimulus money out to Americans.
But the sharp jag away from cash also worries those who look out for older and poorer Americans—groups that tend to be more reliant on paper money either for lack of tech savvy, out of habit or because they don’t participate in the formal banking system.
“Even in this pandemic crisis, we have the same vulnerable people we had before that did not have access to banks or credit cards,” says Vallie Brown, a cash advocate and former Democratic member of San Francisco’s Board of Supervisors.
There’s an ideological component as well: Among cash’s strengths is that it’s universally accepted and difficult to track, giving Americans a just about anonymous way to, say, donate to their preferred church or live out their life as a persecuted minority or back a dissident group. “Some of us still use cash because we think it’s nobody’s business,” says Jim Harper, a visiting fellow with the libertarian-leaning American Enterprise Institute.
For more than 200 years, paper cash has been at the heart of the American economy. How close could coronavirus come to killing off cash—and if it does, is society ready?
Money habits can be hard to break. It took years for ATMs to replace visits to human bank tellers; now, Americans withdraw cash from them at a rate of some 5 billion times a year.
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