The Coronavirus outbreak has led to a dramatic surge in demand for contactless payments options, which has accelerated the ongoing shift from cash transactions to safer digital payment methods.
Jodie Kelley, CEO at Electronic Transactions Association, has noted that during the past 6 to 8 months, they’ve seen cash usage decline further, and that’s a trend she believes that we are going to see continue.
As first reported by CNBC, the significant increase in the demand for contactless payments options has led to excellent performances for major tech firms that provide cashless or digital transaction platforms, like Apple, Square and PayPal.
Dan Schulman, CEO at PayPal, thinks that these new Fintech trends could be a sign that virtual payments are shifting from “being a nice-to-have capability to a must-have essential service.”
Kelly added:
“When the pandemic hit, people really started paying attention to how literally they were spending money and people found that they didn’t want to touch cash and exchange cash.”
There has reportedly been a steady decline in cash transactions during the last few years. Almost a third or over 30% of American adults stated that they usually don’t pay for goods or services with cash during a typical week, according to a recent study conducted by Pew Research Center.
Millennials are reportedly leading the charge when it comes to conducting cashless transactions. A 2019 Experian report found that 1-in-10 or about 10% Millennials (born between 1980 to 1996) use their online or digital wallets for every transaction. Pew Research revealed that around 34% of adults below 50 years of age had not been making purchases with cash.
Younger consumers say that it’s a lot more convenient for them to make cashless payments.
Heima Sritharan, a cashless consumer, noted:
“Not that I was using cash that much before, but I find that during Covid especially, I just don’t want to use cash as much because of the germs aspect.”
While there has been a steady increase in the demand for contactless payment options, many US states and cities have introduced laws that have banned so-called “cashless stores.”
Aaron Klein, policy director at the Center of Regulations and Markets at the Brookings Institution, remarked:
“There is a significant correlation between the use of cash, prepaid, debit, high-end credit and wealth, and there’s a huge correlation between wealth and race. Our payment system is geared toward helping the wealthy and charging the poor.”
Schulman went on to add that he thinks we have all accelerated “where we were going to be in three to five years. And in months, we jumped ahead, and I don’t think there’s any turning back from that.”