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Happening in payments

Nothing To Declare
Mar 25 · 4 min read

It’s ‘Rona time. And the world has been taken by storm. This is no less true for the world of payments.

In early February, the Chinese government reportedly told banks to sterilise money before issuing it in order to curb the virus’ spread. The European Banking Authority (EBA) is also following the lead of the World Health Organization (WHO) and sticking to forms of payment that can better stem the spread of the virus. The WHO recommends methods like holding a card above a payment terminal or using a smartphone app like Apple Pay or Samsung Pay.

To facilitate this, the spending limit for contactless card payments will be increased from £30 to £45 in the UK, with a national roll-out beginning from 1 April 2020, UK Finance announced. This follows EBA recommendations that payment firms should increase contactless payment limits to 50 euros if they can do so.

So, the world abandons cash because of Coronavirus, usage drops by half in the UK, contactless up to £45 and you can no longer pay for your Costa coffee with cash. Panic.

But Germany holds on to cash. As per usual, Germans have a somewhat special reaction to what is happening. As the virus starts to spread through the country, many people are withdrawing money out of ATMs so they can hold on to their cash — a very German thing to do. Though very unfounded as most deposits should be safe because of national insurance schemes.

But fears of banknotes transmitting the virus are starting to creep in, which might make Germans turn from their prefered method of payment. You see, Germans are one of the last people living in a developed economy still relying heavily on cash to complete their transactions.

The change, I am sure, will be welcomed by payment processors around the world. Their enemy is cash.

But is cash our enemy too? Why are we abandoning this method of payment which has stood the test of time? Btw, banknotes were invented in China in the 7th century so merchants and state officials wouldn’t have to carry heavy bags with metals anymore — long story short, check below for more details.

Well, we’re paying by card because it’s convenient. I pay by card to avoid change, maths and even tipping (yeah, go on judge me, this is not a blog where I explain why tipping is evil [but I should write one]). Companies offer this option because there’s a reduction in administration on their part, and governments love it because it makes tax evasion harder. If only the Greeks would have paid by card…

But the death of cash has its disadvantages too. Let’s talk about Sweden, where only 13% of people reported using cash for a recent purchase in 2018, according to a survey by Sveriges Risk Bank.

Why is this bad? Because the old, the poor, the vulnerable are locked outside a closed-loop as banks and merchants no longer accept cash. This is a very basic explanation and we’re not even going to discuss financial inclusion, well financial exclusion, where people that rely on cash find it more difficult to access good mortgages, for example, because they don’t have a credit history.

I deviated from the topic at hand. The Swedish march towards a cashless society is something I found interesting and wanted to share. But does it mean that Swedes are less likely to get Coronavirus from buying stuff?

Not really. Euronews reported that banknotes are not likely to carry coronavirus, despite some reports that they could risk spreading the virus. Here is Stephanie Brickman from the WHO contradicting the statements made by her organisation a few weeks ago: “We do not know [how long the virus lasts on banknotes], but we estimate not longer than two hours”.

Most transmission of the virus that causes the COVID-19 disease is through person-to-person contact and not from touching objects.

Now let me remind you that we live in a world where Trump won the US presidency and Brexit happened. Facts are irrelevant. Just like how toilet paper is flying off the shelves, so might cash disappear from our lives as fears around the virus led to many businesses sticking to contactless payments for now. And maybe forever.

Further reading:

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