The relationship between the pandemic and the growing use of contactless payment goes back to the early days of Covid, when we still knew very little about how the virus was transmitted, and we mistakenly believed, that this could be done by touching infected surfaces.
That erroneous belief still hasn’t gone away, and many shops, restaurants and other public places still have hydroalcoholic gel, which does nothing to prevent Covid or any other virus, but nevertheless, many of us now see cash as dirty and potentially dangerous.
On top of this, lockdown saw many of us turn to our credit cards in a big way to buy stuff online. At the same time, over recent years, many establishments have come to see cash as a time-consuming hassle, preferring contactless payment, even for small amounts.
The pandemic has been another, perhaps the final, nail in the coffin of a technology, cash, which has been in sharp decline in many countries for some time. In certain parts of the United States, in China and in Sweden, for example, paying in cash prompts strange looks from vendors, and in some places is simply not possible. In Sweden, where only 1% of economic transactions use cash, older and poorer people have hit back, complaining that rapid adoption of contactless payments is making them feel like outcasts.
India and Germany have held onto their cash, although the Germans are also seeing a recent pandemic-related setback. Central banks would prefer a cashless world and are considering launching their own digital currencies, questioning the suitability of cash for many types of transactions, its poor traceability, its anonymity. At the same time, critics point out that cash’s anonymity and portability is precisely its strength and questioning whether we can really live without it.
Then there’s the question of tipping. The service industries still depend on it: hotel room cleaners depend on the money that guests often leave behind to top up their meager wages.
The same goes for the hospitality sector, where some bars and restaurants still don’t accept credit card tips because of the problems of accounting for them later. Similarly, bellhops, porters, dancers in strip clubs and of course the homeless, will be hard hit by the disappearance of cash. A growing number of churches, are now making collections by via a QR code.
The issue is complicated by differences in customs: in some countries a tip of less than 10% is considered an insult; while in others the bill is simply rounded up or no tip is left. When people become accustomed to not carrying cash in their pockets because it is simply no longer necessary, going back to the old ways can be costly. Increasingly, many people find themselves going to an ATM not because they need cash, but simply because they are going to a hotel and need some money for tipping.
We have yet to come up with a way to instantly and seamlessly make a payment to a stranger, in a reasonably discreet manner and without the need to even communicate phone number or identity. This is no small matter: tips or charity are of significant value to many people. Will technology be able to come up with a simple solution for those small but commonplace payments where no traceability is required, and without posing a security problem?