The Coronavirus pandemic has changed our lives in ways we could not have imagined. Once busy streets are now bare, remote working has become the norm, bars and restaurants are closed, and who knows how long we’ll be wearing masks for?
But how has Coronavirus affected our society in terms of payment behaviours? Are we now spending less cash? Are we moving towards a cashless society? And has the value of banknotes been affected? We explore these types of questions right here.
Are we using less cash during Covid-19?
Use of physical money was falling before the Covid-19 pandemic, mainly due to advancements in technology such as Apple Pay and other contactless payment methods. But lockdown has sped that up. Why? With most of us now shopping online, and retailers asking if we can pay by card to help stop the spread of Covid-19, there are simply fewer scenarios where cash is needed.
The rise of online shopping
Ecommerce transactions accounted for 26% of UK retail spending in September 2020, compared to 18% just one year earlier. Although online shopping has been a growing trend for many years, the Covid crisis has its part to play. How do we know? Well, a survey conducted by the Paysafe group highlights that 21% of UK respondents said they were shopping online for the first time due to Covid-19.
But what does this mean for the future of cash? Could we be heading towards a cashless society?
Are we moving to a cashless society?
Although we’re using less cash and ecommerce is on the rise, cash is here to stay. From increased security and privacy over digital transactions, to zero payment fees and less temptation to overspend, cash is, and will continue to be an integral part of society. In fact, research from the Bank of Canada shows that 74% of people have no plans to go cashless, while the Bank of England shares its continuous growth of notes in circulation.
A growth in the demand and value of banknotes
While the transactional use of cash has declined, the demand and value of cash in circulation has increased. This is likely due to people withdrawing and holding onto extra cash as a precautionary response to heightened uncertainty.
For the UK, the value of banknotes in circulation rose from £72 billion in January 2019, to £78 billion following the lockdown announcement on 23 March 2020 – that’s an 8% increase in the value of cash in circulation.
Comparable surges in cash demand during Covid-19 have shown in a number of other countries too. Cash demand statistics can be found for countries such as Russia, Brazil, India and Australia in this article released by VoxEU.
What impact will this have on Cash Processing Operations?
Although we’ve established 74% of people have no plans to go cashless, can we anticipate what are the greater effects of Covid on cash usage across the world?
In short, Covid-19 has had an unqualified impact on our cash usage – we simply don’t the full effects of Covid-19 on cash and how it will shape the future in banking and other sectors.
What we can be confident on is that there will be significant uncertainty. All around the globe, people are holding onto their cash, resulting in a reduction of cash volumes to process globally.
Whatever the outcome, we know that the cash impact of Covid will be different all around the world.
When looking at the current payment behaviours around the world, the majority of European countries still value physical cash, whilst nations in Asia have embraced cashless payments more than anywhere else.
Japan is an exception to this rule, though. Right now, only around 18% of payments in Japan are cashless, according to the Japanese government. This is comparable to European nations such as Spain and Italy, whereas neighbours including China and South Korea have embraced cashless payments on a larger scale.
Image sourced from Statista.
As cash usage continues to fluctuate around the world, with countries going in and out of lockdown, it’s imperative that cash processing systems are as efficient as they can be. Not only does this prepare businesses for a return to the ‘normal’ we’re more accustomed to, but ensures the ups and downs of cash usage are being managed within a cash processing operation.
We know that Covid-19 isn’t going anywhere soon, and with that, things can change fast. Cash processing organisations must also prepare for this by looking towards flexible and efficient solutions that can adapt to meet changing requirements and individual business needs.
Cash processing systems can become more flexible by incorporating solutions that are smaller and require less capital capital expenditure alongside a lower cost of ownership. Additionally systems that have built in modularity both in terms of hardware and software can be upgraded and updated as needs and requirements change. Cash processing operations can also become more efficient, by using software to automate processes and track performance.
Supporting cash processes through Covid-19
At CPS, we offer a range of flexible and efficient banknote processing systems that can scale with your business. Our high-speed 7000i sorting solution can be configured and expanded as the demands on your currency processing change and multiply, supporting you through the uncertain times of Covid-19.
Similarly, our X Range includes six configurations to give you the flexibility required in today’s climate. With integrations available to truly optimise your efficiency, the X Range is suited to commercial banks, bank branches, cash centres and small central banks.
If you’re looking for a flexible and efficient cash processing solution during Covid-19, contact our expert team today for more information – we’re standing by to support your cash processing needs.