COVID-19 a cash killer?

Nearly half of all purchases made in person are now done contactless, according to new data, with shoppers and sellers afraid of germs on cash during the coronavirus pandemic.

Credit card company Mastercard has reported a 44 per cent decrease in the use of cash when making purchases in person since the COVID-19 outbreak began.

More than half (52 per cent) of Aussies are concerned about the ‘dirtiness’ of cash as a result of COVID-19. One in five (21 per cent) said the risk of infection transmission has led to their total elimination of cash usage.

Eight in 10 (79 per cent) of Australians say contactless payments are a cleaner way to pay.

Almost nine in 10 (88 per cent) of contactless payments involved debit or credit cards and around a quarter use their mobile phone to pay.

The pandemic has led to a huge behavioural shift in payment methods, with 94 per cent of Aussies having made contactless purchases at the grocery store, 70 per cent doing so at a pharmacy and 56 per cent at any other retailer.

“Consumer behaviour around payments has seen a shift since COVID-19, which has transformed the daily lives of Australians,” said Mastercard division president Australasia Richard Wormald.

“Australians are looking for a safe, clean and secure way to pay, which has seen contactless card and device transactions surge.

“It is clear that this is the preferred way to pay, now, and for the future.”

Almost eight in 10 (79 per cent) people worldwide and more than nine in 10 (91 per cent) in the Asia Pacific are now using tap-and-go payments for regular purchases. Globally, almost half (46 per cent) say contactless payments will now be a permanent fixture for them.

“The fact that three in four people intend to keep using tap-and-go after the pandemic is a strong sign that consumers see the long-term benefits of having a safer, cleaner way to pay, checking out faster and being more socially responsible,” said Mastercard executive vice-president, products and innovation, Asia Pacific, Sandeep Malhotra.

The World Health Organisation (WHO) recommends the use of bank cards over cash to prevent the spread of COVID-19. Cashless payment is also encouraged by supermarket giants Aldi, Woolworths and Coles on their websites.

According to a CHOICE report, microbiology professor Peter White believes the virus could remain infectious on objects such as polymer banknotes for “anywhere between six and 24 hours depending on the temperature and humidity”.

Going cashless may help reduce the spread of the virus, but some money experts are concerned the increased use of credit cards will lead to money mismanagement and greater debt.

“The Australian government official medical advice is to ‘tap to pay where possible instead of using cash’ – this advice will drive increased use in credit and store cards,” said Financial Mindfulness chief Andrew Fleming.

“A lot of people have seen their incomes slashed, and they are being asked to reach for their cards to pay for goods and services.

“In January 2020, just before the crisis, there was $42.6 billion owing on credit cards with $28.4 billion accruing interest. This situation, with lower incomes and increased use of cards – is a perfect storm for millions of Australians to deepen the financial holes they were already in.”

Australia’s increased use of digital payment methods could be the nail in the old-fashioned cash coffin, credit card expert Roland Bleyer told Nest Egg.

He claims there are a number of reasons why this could be the case, noting that in the past month alone, “there has been a definite shift in the way we pay for things, with merchants moving away from cash – and the germs it may carry – declaring their preference for card payments instead” and that “as coronavirus continues to assert its influence over what we can and can’t do, Aussies are being encouraged to use contactless more than ever as a way to slow the spread”.

A number of stores already no longer accept cash. Tellers in stores that haven’t made the switch wear gloves to handle cash, or state that a contactless payment method is preferred.

“I think we will see more and more businesses refusing to accept cash. This is going to impact on certain areas of society, the aged sector and those less fortunate – more than others,” said Mr Bleyer.

He says there are more benefits to going cashless than reducing germ transmission, such as lowering the risk of petty theft at the cash register; more traceable business records for tax purposes, and that it’s simply a faster method of payment.

Mr Bleyer also busts the myth that a merchant must accept cash.

“[There is a] widespread belief that because official Australian coins and banknotes are legal tender, merchants must accept them as payment,” he said.

“However, the law sees it somewhat differently. According to the Currency Act, merchants have certain rights when it comes to accepting payments,” he said, adding that a merchant already has the right to limit the dollar amount in coins a customer may use to make a purchase.

He acknowledged that older Australians may have a hard time dealing with the switch to contactless payments.

“For many Aussies, especially those of the older generation, cash is still king,” he said.

“They like having cash, they like using cash, and they don’t particularly like the idea of having to use anything but cash when cash is still ‘legal tender’.”

He expects the law will protect businesses that wish to make a permanent switch to contactless payments.

“According to the Reserve Bank of Australia, merchants are ‘at liberty to set the commercial terms upon which payment will take place’ before the purchase, and refusal to accept payment in legal tender banknotes and coins is not unlawful,” he said.

“So, as long as the merchant has a sign at the counter that lays out these terms, which is visible to customers before the point of purchase, it is within its rights not to accept cash.”

Will you manage once cash is dead?

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