Will the Post-Pandemic World Be Cashless?

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One hallmark of the COVID-19 crisis has been acceleration. Trends that were well underway but seen as evolving over the next several years were suddenly in the mainstream.

Remote work. Small-business eCommerce. Food delivery apps. Ghost kitchens. Contactless payments.

Another trend often mentioned in the same breath is the elimination of cash as a means of exchange.

After all, cash is generally only exchanged in face-to-face transactions. Cash is notoriously dirty. Why not use this moment to bring forward what many financial experts see as the inevitable end of cash?

M-Pesa added one million Kenyan users during the crisis.

Big Jump in Mobile Money During Crisis

There is certainly some evidence that in Africa and around the world, the crisis has curtailed the use of cash in favor of credit cards and mobile payments. The less touching the better during a pandemic.

A recent article in the National summarizes the evidence.

In Kenya, after the lockdown began in March, the M-Pesa mobile money service gained one million new subscribers. This means about three-fourths of adult Kenyans (about 25 million) are now using the platform to make and receive payments.

Ghana has seen record levels of mobile money usage. And Togo used a mobile money platform to deliver emergency financial aid to its citizens. And Zimbabwe, facing a severe cash shortage, operates at about 90% digital transactions.

South Africans are also embracing contactless commerce, according to a study by MasterCard. Since the crisis began, according to Forbes, citing the study, “89% of South African respondents say they have been using contactless methods to pay for groceries. Another 60% do so for pharmaceutical items, 39% for other retail items, 15% for fast food, and 8% for transport.”

Big Jumps in Cashless Commerce

In the United States, the crisis appears to have accelerated the growth in the number of businesses that describe themselves as cashless.

report by the U.S. point of sale software company Square found that between 1 March and 23 April, the number of businesses using Square that defined themselves as “cashless” grew from 8% to 31%.

Square’s definition of cashless is processing 95% or more transactions through either a credit or debit card.

Coffee merchant Starbucks is experimenting with the notion of a cash-free future. It has designated one of its Seattle stores as a cash-free zone. The idea is to test how a cashless environment impacts consumer behavor.

Already, according to Starbucks CEO Kevin Johnson, as quoted by CNBC, “30% of our payments in the United States [are] done with a mobile phone. Over 40% is done with phones and Star Value cards with rewards. In China, over 60% of our tenders come from mobile payments.”

So clearly COVID has created momentum that at the very least points to a much lower usage of cash. Certainly for now, and likely into the future.

Not So Fast….

But skeptics caution against believing predictions that cash will be eliminated.

A recent Fast Company article summarizing the Square report points out that “85% of small-business owners said they will never stop accepting cash at their business, according to a survey commissioned by Square.

“Many pro-cash advocates worry that a completely cash-free society will disproportionately hurt low-income customers, and some have even pushed for legislation against the idea. Before the pandemic, multiple cities had already moved to ban the use of cash-free retail businesses.”

Perhaps Africa will unequivocally embrace a cash-free future.

“This pandemic has been a defining moment for mobile-money providers,” said Akinwale Goodluck, head of Sub-Saharan Africa for GSMA, told the National. “It indicates that Africa can lead the world in digital financial transformation toward a cashless society.”


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