According to an April 2021 survey conducted by the Federal Reserve Bank of San Francisco, consumers are actually holding onto more cash than they were at the start of the pandemic. The survey found that the average household had cash holdings of $326, $80 higher than a survey conducted the October before COVID lockdowns began. While the reserve experienced an elevated demand for change, the survey suggested that any shortages had little to no impact on actual consumers. Only 2% of cash users reported issues receiving change after their transactions in August 2020. By April 2021, that number decreased even further to 1%.
Can Cash Give You COVID?
Despite worldwide fears concerning the spread of COVID via currency, scientific evidence suggests that bills are an unlikely transmission source. A study conducted by the Bank of England found that virus particles quickly decayed when deposited on all types of banknotes, including paper notes and polymer notes with various degrees of wear. The authors further noted that despite the fact that some viable virus particles remained, these particles would be unlikely to cause an infection in real-life conditions. Not only are consumers unlikely to sneeze directly onto a bill, but any transfer of virus particles (to a finger, for example, and then from that finger to a face) would also be imperfect and leave even more of the virus behind.
Both businesses and banks have implemented new technologies and practices to reduce exposure to potentially infected cash. A July 2020 FEMA release details best practices for handling cash payments, including limiting which employees handle cash, mandating regular handwashing, and mandating the use of face coverings. The document further describes how businesses, banks, and governments have been working together to encourage the use of contactless payments. In addition to new, deliberate steps, existing systems like remote check deposits, app-based money transfers, and RFID-chipped credit cards helped to alleviate the need to visit a bank during the lockdown.
The CDC, WHO, and other public health organizations issued few direct warnings about the use of banknotes. Still, businesses and banks have invested in high-tech bank cleaning services to further reduce the risk of contaminated bills. The People’s Bank of China utilized UV light in order to disinfect banknotes, while firms like Spectra Systems sell high-temperature disinfecting systems that use nitrogen gas to preserve the appearance and security features in paper cash. Consumers and small businesses employed less complex solutions: polymer banknotes can be safely washed and disinfected. Paper notes can be damaged by detergents and disinfectants, so it’s best to disinfect them with a hot iron.
The lasting impacts of COVID-19 on banking will be cultural and economic. Cash payments for legitimate, on-the-books transactions had been in steady decline for years when the virus broke in 2020. The virus accelerated that trend, kickstarting the success of alternative methods of payment and forcing banks to refine remote banking services for individuals stuck at home during the lockdown. Cash doesn’t look like it’s about to bounce back, either — the FRBSF survey noted that the number of respondents who used cash spiked briefly to 73% during August 2020, but that number plummeted down to 58% in the more recent April 2021 survey. Consumers clearly think cash is important, and it’s not going away, but it’s likely to become an increasingly smaller player in a world dominated by digital transactions.