Coronavirus Crisis: The Future of Cash, Checks, Credit Cards & Crypto

The traditional payments ecosystem expose countless people to the risk of a COVID-19 infection, when we should be able to just wave our phones by no-touch payment terminals to make transactions. Will the world finally be ready to adopt digital wallets now that their lives may depend on it?

Someone with COVID-19 hands a cashier their credit card. The transaction is processed. You’re next. When the cashier hands you your credit card back, it may have viral matter smeared all over it.

Then there’s the ATM touchscreen. Debit cards. POS terminals with keypads and stylus pens. The folio in the restaurant with your bill, and the pen they give you to sign the check.

Our antiquated payments system wasn’t ready for the digital era, and it is even less prepared for a contagious pandemic. In the typical day, someone may make a half dozen payments — Starbucks, the gas station, lunch, dry cleaners, grocery store, restaurants, etc. But there is almost no traditional payment mechanism that doesn’t expose both parties — the payer and payee — to the risk of a COVID-19 infection.

Millions of transactions every day. Millions of opportunities to spread everything from the common cold and influenza to more serious diseases … like the deadly coronavirus.

But there are digital options, such as mobile devices.

This is not to say that mobile devices are, by themselves, free of germs by any means. (The Wall Street Journal ran a how-to article on how to disinfect them without damaging them.) What makes them potentially more appealing from a COVID-19 viewpoint is that apps and mobile wallets allow consumers to make in-person payments without contact with another person. They can “wave and pay” instead of handing and being handed cash, coins, or cards. And P2P services like Zelle, bank apps using Zelle, and PayPal’s Venmo can enable individuals to pay and reimburse each other without exchanging cash.

Consumers’ desire for all forms of contactless payment may start ramping up. The Futurist Group, which regularly studies consumer preferences in cards and other payment areas, found in early March 2020 research that 38% of people considering a card offer with a contactless feature to be a table stakes matter now. That’s an increase of 26.8% over the firm’s previous round of research.

“While this is early data, and more time is needed to assess the real and lasting impact on consumer behavior, this is an indication that the tipping point for contactless usage in U.S. may arrive faster than anticipated,” the firm stated in a blog. “In this moment in time, issuers must increase awareness of the contactless feature on their cards. Targeted marketing efforts must go beyond explaining the functionality and instead educate consumers about all benefits that contactless can offer. Responsible communication should prioritize those who are at the highest risk for infection.”

One wrinkle is the rising number of national retail chains that are shuttering their stores in the U.S. for some period of time, either a short stint for deep cleaning or for at least a couple of weeks to see where things stand. Some have cut back hours, or closed select locations. Use of payment means of any kind will fall off in some areas simply because stores aren’t open or lack goods that people are seeking. That leaves the non-contact means of purchasing, via the internet, though even there such standbys as Amazon have been out of some essentials. Even some delivery services such as Instacart have had to delay deliveries due to rising demand and falling supply.

One of the first instincts people have in a situation like natural disasters, impending storms or 2020’s unprecedented COVID-19 pandemic is to get some cash in the house. “Everyone always takes money, and you don’t need electronic networks to use it,” is part of the thinking.

In fact, in mid-March 2020 affluent consumers of a Bank of America Park Avenue branch began withdrawing very large amounts of cash in anticipation of virus-related issues, according to the New York Times. The paper quoted witnesses and bank sources indicating that the branch temporarily ran low on $100 bills, though smaller denominations remained in supply in branch and in the office’s ATMs.

“Most people use far less cash than they did even a decade ago, as credit cards and other forms of digital payment have become the norm,” the paper stated. “Still, stacks of bills are psychologically reassuring, and are often what people, even the wealthiest, turn to in an unpredictable world.”

But when people bring a stack of currency into their home, what else might they be bringing in?

‘Dirty Money’ is Literally That

A few years ago Scientific American in “Dirty Money: The Public Health Case for a Cashless Society,” explained how many nasties can reside on money (some details omitted in case you are eating while reading).

“The fibrous surfaces of U.S. currency provide ample crevices for bacteria to make themselves at home,” the publication stated. “And the longer any of that money stays in circulation, the more opportunity it has to become contaminated.” The article noted that smaller denominations get spent more frequently and research indicates they are dirtier than big bills.

A New York University study found over 3,000 kind of bacteria can live on American money.

Next time you lick a fingertip or thumb while counting out bills, think about that.

Indeed, while coins are said to be less susceptible to carrying disease, they aren’t free of it. The classic Westin St. Francis San Francisco Hotel has had a staffer in charge of literally washing the change the hotel gives out since the 1930s. Originally, the “money laundering” began to keep ladies’ white gloves pristine.

Literal money laundering, as an idea at least, goes back even further. An editorial in the Journal of the American Medical Association proposed that “banking institutions disinfect all paper currency which passes through their hands.” That was in 1904, 14 years before the 1918 Great Influenza Pandemic and 116 years before today’s coronavirus, COVID-19, came along.

Since the outbreak of COVID-19, here is some of what’s been happening with paper money:

  • Federal Reserve banks have been quarantining dollars that come back from Asia for seven to ten days to avoid spreading the virus, even though contact with other people or their bodily fluids is considered the main way of catching it.
  • In China and South Korea, banknotes have been quarantined for seven to 14 days after being subjected to ultraviolet light, or simply destroyed. South Korea’s central bank already routinely heats money to disinfect it.
  • In a widely repeated report in the British media, the World Health Organization was quoted as warning that currency could harbor the coronavirus. Soon afterwards WHO said its spokesperson had been misunderstood, and simply meant that washing one’s hands after handling cash was a common-sense precaution.
  • COVID-19, also known as SARS-CoV-2, is believed to stay alive on surfaces. As a report by McKinsey & Co. notes, this disease is more infectious than influenza, though much about it has been educated judgments in the absence of more knowledge.
  • A review of 22 studies of earlier coronaviruses’ behavior in hospitals, appearing in the Journal of Hospital Infection, found that this family of bug can persist on metal, glass and plastic for up to nine days absent disinfection. Regarding paper, one virus could linger for a day, another strain for four to five days. Currency wasn’t specifically mentioned.
  • It’s been acknowledged that the surfaces and keypads of ATMs may have germs lingering on them.

Subsequent to the initial publication of this article, results of a very preliminary test by the National Institutes of Health of the current coronavirus, COVID-19, was published. The paper, in early form, reported on tests of the lifespan of the virus on common materials found in homes. The virus remained most stable on plastic and stainless steel, lasting up to 72 hours, though with less potency. The virus didn’t last a full day on cardboard.

In reporting on that test, MIT Technology Review pointed out that “there is no definitive proof the virus is actually spread via inanimate objects.” However, little is really known about the disease and the Center for Disease Control (CDC) has pointed out that there is no vaccine for it.

Read More: Banking Without Branches a Matter of Life and Death

Going to Plastic Payment Cards Is No Safe Bet Either

OK, so if paper money, which includes checks though they don’t typically circulate as widely as currency, can harbor disease, is hard, smooth plastic the way to go?

Actually, according to one expert, no.

USA Today quoted Dr. Susan Whittier, a clinical microbiologist at New York -Presbyterian Hospital at Columbia University Medical Center as saying: “Cash is not a good vehicle to transport respiratory viruses, however, cards have a little bit more potential. If someone is coughing, and then they hand their credit card to someone across the counter, I wouldn’t rule out the potential of transmission.” (The three warning signs of potential COVID-19 infection, identified by CDC, include fever, cough and shortness of breath.)

Studies done over the last few years by LendEDU and in conjunction with academic researchers’ participation indicate that plastic cards are not a germ-free path. Actually, disgustingly far from it.

In general, the two studies indicate that plastic credit and debit cards can actually be more contaminated than currency, sometimes. The researchers point out that payment cards used in bars and restaurants may be taken from the table by a server, who may or may not be reading the “employees must wash hands” signs in the restroom. Sometimes they are placed on a surface like a bar or cashier’s stand. Cashiers may take the card at the register to swipe it, adding you to the routing list of germ profiles they’ve contacted that day from other cards, cash and coins, not to mention anything else they’ve touched that could harbor a virus or bacteria.

And cards may not be terribly clean when they first leave the purchaser’s physical wallet or handbag, either. The report noted that wallets are rife with Staphylococcus aureus bacteria, a nasty bug that can live for days or weeks on surfaces. And where was that card last time it was out of the wallet?

Experts point out that there are germs everywhere, even on human skin, so that the presence of them on payment cards doesn’t necessarily mean that people will catch something from them. On the other hand, the research removes any idea that plastic cards are clean, even if they are kept in one of those little sleeves. There is at least one patent in the U.S. for antimicrobial payment cards, but it could not be learned if the technology has been licensed.

Here’s something else to lighten up the mood next time you touch a payment tablet at a food truck, bar, or restaurant — the study found that those gadgets which people tap and sign, often after eating, are the payment method most likely to harbor Streptococcus pneumonia, which can cause meningitis and pneumonia. Something to think about, too, when inserting and swiping and picking a tip on the touch screen available in many cabs and limos today. Uber, Lyft and other rideshare services typically take payment via their apps, which reside on the consumer’s smartphone, not a shared screen.

Kentucky Fried Chicken killed a U.K. ad campaign that picked up on its historical “finger licking good” slogan, according to Advertising Age. Not hard to see why.

Note this from the Centers for Disease Control: “It may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this is not thought to be the main way the virus spreads.”

That said, it is still early days.

Countertrends Seen in the Cashless and Cash Mix

A viewpoint is emerging that the coronavirus could accelerate adoption of digital payments and other alternatives to cash and checks.

“When cash is a vector for the disease, and retail stores and branches are closed, most of the world’s population will be adversely affected.”
— Brett King, financial futurist

“In the face of this disease, it’s clear that if a pandemic does eventuate, that many people will be stranded due to the lack of digital support by major elements of the financial system,” writes banking futurist Brett King, in a LinkedIn blog. “When cash is a vector for the disease, and retail stores and branches are closed, most of the world’s population will be adversely affected.”

All the issues cited earlier would suggest to many that handling money that passes through so many hands poses a health risk. The question today is, with so many alternatives to currency and coin available, why not simply ditch physical currency?

The odd thing about current affairs is that until the coronavirus migrated out of China, the debate in the U.S. has been over whether there is a “right to choose cash.”

“American consumers have grown less reliant on cash,” according to an issues paper by Square. “… The trend is spreading from coastal coffee shops to rural restaurants.” Yet up until now choice often remains. Only one in ten Square merchants are cashless, the paper found, and four out of five small business owners surveyed (prior to the debut of COVID-19) say they will never stop accepting currency.

Yet there’s an attraction to cashlessness. Writing in a blog for the Federal Reserve Bank of Atlanta, David Lott, a payments risk expert on staff, observed that: “There is no question that technology has permitted businesses that previously were cash-only to now either exclude cash or allow payment cards. Vending machines, mass transit fares, and parking meters —which all used to be cash-only — are prime examples of this transition.”

Continues Lott: “Since we have no federal law requiring businesses to accept cash, a few scattered private business owners have refused to take it. They cite the costs of handling cash and the security risks of robbery and employee theft as major disadvantages.” It’s conceivable they could cite health risks now.

Lott notes, however, that the Atlanta Fed’s annual “Diary of Consumer Payment Choice” indicates that unbanked consumers use cash for 62% of their payments, while underbanked people do so for only 27%, and fully banked households only use cash for 20% of their spending. Thus the issue takes on a social class context, leading to political action. Lott indicates that Massachusetts and N.J. don’t permit cashless operation and that New Hampshire, Oregon, Wisconsin and Vermont have had similar legislation introduced. Four major cities — New York City, Philadelphia, San Francisco and Washington, D.C., have set their own laws barring cashlessness — complete with fines.

Even leading-edge retail operations like Amazon Go, intended to be a cashless store from the start, now accept cash.

“Going cashless is the exception, not the norm,” the Square study reports. Two out of three small business owners surveyed by Square don’t expect America to ever go cashless.

Financial services commentator Chris Skinner, in his blog The Finanser, acknowledged the potential health risks of cash, but he is skeptical about any significant change in the near future.

“Although I predict, as do many, the end of the use of cash,” wrote Skinner, “it is not going to disappear soon. It is an integral part of society. Today, it is the only way to exchange an immediate exchange of value anonymously, with trust. What digital service does that?”

In the Atlanta Fed study cited by Lott earlier, use of cash slipped. In terms of number of payments, consumers made 54% with debit, credit and prepaid cards. They used cash, checks or money orders for 32%. Electronic methods were used for 11%. Compared to the previous study, the volume share for cards and electronics increased. “Although cards were used more frequently than electronic payments, the values were approximately equal for cards and for electronic instruments,” according to the Fed bank’s study. By value, electronic channels accounted for 36%.

Read More: Financial Futurist Brett King Predicts Banking Becomes Embedded ‘Experiences’

Some Worry about Another Side of Digital Payments

It is tempting to suggest that moving away from cash and other paper payment media like checks would cut down on coronavirus risk, but something needs to be considered. China is an international leader in digital payments and mobile commerce, and yet it is where the disease first arose.

“China is an international leader in digital payments and mobile commerce, and yet it is where the disease first arose.”

“The vast majority of the Chinese economy runs on ‘digital cash,’ not physical cash, other than in rural areas,” said Andreas Antonopoulos, author and cryptocurrency expert during an appearance on CoinDesk’s podcast, “Let’s Talk Bitcoin,” which he co-hosts. Antonopoulos said that Alipay and competitors play a major role in payments not only in China, but in adjacent territory in Southeast Asia and Australia, as well as nearly anywhere that Chinese tourists have gone.

“This is going to push China very rapidly into crossing the last mile quickly,” he observed.

Or will it? Given the state of people’s thinking about coronavirus, it’s unclear, according to Adam Levine, co-host of the podcast. People worry about catching the illness from an ATM keypad, he noted. “Is touching a chip card reader the same thing? Is there an infection vector there?” Levine asked. “It’s not necessarily true, but it’s what people will think, in their day-to-day interactions.”

There’s a specter behind digital payments that some might dismiss as paranoiac, but then again, maybe not so under today’s circumstances. Cash, as noted earlier, can be anonymous. Digital payments leave a trail. Antonopoulos pointed out that in China that data was used to track who had contact with infected citizens, leading to government-imposed quarantines of the exposed.

Read More: 7 Trends Disrupting The Future of Payments: From Apple Pay to Zelle

Is Cryptocurrency an Answer to Concerns?

While electronic payments from Zelle and Venmo to mobile pay and more have been around for some time now, on a somewhat parallel track cryptocurrency transactions are being performed through various crypto-wallets.

For many in the traditional payments and banking fields, this is a looking-glass world. There are numerous cryptocurrencies, even one recently invented that is a sort of bet on the coronavirus issue.

Even the well-known Bitcoin is not one thing anymore. In simple terms, there’s one alternative that’s a form of investment that is priced in the thousands of dollars, and that can be quite volatile. There are now multiple variations that originated from “Bitcoin Cash,” which is where Bitcoin for spending lives.

Levine and his podcast co-hosts are backers of crypto solutions, but they don’t see crypto stepping up as a solution in any near-term health crisis.

“Crypto is not ready to take on the mantle yet,” said Levine. “Cryptocurrency as an alternative that we can roll out at scale — I just don’t know if we are there yet.”

Antonopoulos agreed. “Using cryptocurrency as something to resist a biological threat is not going to be a big issue.”

You just can’t take people entirely out of any financial equation, and so long as there are ills out there, there will always be some physical risk. As one fintech expert recently pointed out after a visit to a warehouse store, one can swab the shopping cart handle, seek out automated doors, and wear a mask. But any surface on a can, bottle or box has to have been touched by a human at some point, if only at checkout.

You can’t remove the human factor.

This article was last updated on March 16.

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