Electronic payments look more appealing as people fear cash could spread coronavirus
The coronavirus outbreak is prompting second thoughts about reaching for cash.
As the number of cases tick up in the U.S., some are going cashless to avoid potential hygiene issues around handling banknotes. Regardless of whether there’s a proven risk, the “psychological factor” of people thinking of cash as “unclean” could change how they choose to pay, according to Bain & Co. partner, Thomas Olsen. “Merchants are encouraging people not to use cash, citing Coronavirus,” Olsen told CNBC. “We would expect some trigger to accelerate behavior from cash to digital payments.”
The U.S. Federal Reserve is also changing how it handles greenbacks. As a “precautionary measure,” the Fed increased the minimum holding period for bills coming from Asia and Europe to the U.S. to a 10-day minimum. The previous minimum was five days. “The Fed’s staying in contact with the CDC to make sure we’re aware of the latest thinking, and right now it’s mainly person to person contact,” a Fed spokesperson said in a phone interview. “We’re prepared to modify that depending on the circumstances.”
Banks in China, where the outbreak started, were ordered to disinfect cash before issuing it to the public in an attempt to slow the virus spread. More than 169,000 people have tested positive for coronavirus as of Monday, according to Johns Hopkins University. Chinese government officials said during a February press conference that banks would only be allowed to release new bills that had been sterilized. Meanwhile, the World Health Organization denied reports that the agency warned against using cash. “WHO did not say banknotes would transmit COVID-19, nor have we issued any warnings or statements about this,” a WHO spokesperson said in an email.