Is the Coronavirus Killing Cash for Good?

Bills and coins may be covered in germs, but as we spiral toward an economic depression, cutting out any kind of currency is a bad, bad idea

One of many preposterous conspiracy theories spreading alongside the coronavirus alleges that the deadly pandemic was deliberately manufactured to eliminate cash, essentially imposing a global economy reliant entirely on digital and card payments. The repercussions of a cashless society, conspiracists argue, include increased surveillance and ruthless taxation — every penny transported through a relentlessly surveyed and highly traceable financial system.

Much of the theory revolves around comments made by the World Health Organization, which were interpreted by some as, “Use contactless payments, because the coronavirus flourishes on cash.” Really, the organization simply advised washing your hands whenever you use cash, but has yet to release any sort of concrete warning that says to ditch cash altogether. Nonetheless, more and more businesses have started encouraging customers to pay either online or with debit or credit cards to control the spread of germs. 

Now, everyone (conspiracists included) understands that cash is grimy, each bill and coin inescapably peppered by diverse colonies of strange bacteria. “The U.S. dollar is one of the most circulated currencies in the world, with a lifespan of between five and 23 years,” explains Johnny Fulfer, editor of The Economic Historian blog. “The lower the bill, the more it circulates. With a combination of cotton and fiber, paper currency is a haven for bacteria that has the potential to spread disease. One fairly recent study examined the circulation of $1 bills in New York City. They found several different types of microorganisms that had spread on the bills over several years.”

That said, some studies argue that cards can be just as filthy, if not more so. Still, cards are much easier to clean, which would surely make them preferable during a pandemic. “With the onset of COVID-19, people are starting to think about all the things that could potentially have germs on them, including money,” Fulfer says. “Most people probably aren’t going to take the time to wash their money, so I’m thinking there will be a lot less demand for physical cash in the coming months. The World Health Organization has also advised people not to use cash because of the virus, though they haven’t yet issued a warning against it. Even if they don’t give an official warning, it doesn’t seem unreasonable to assume that people still won’t want to take the risk. People will likely begin to rely on credit and debit cards, Apple Pay, Cash App and Venmo, among others, much more than they had prior to the pandemic. It’s also possible that businesses could begin asking customers to use debit and credit cards more — to reduce the risk of spreading the virus — which would further reduce the demand for cash.”

However, some people have been inspired by the prospect of financial collapse to drain their accounts and stash cash instead, a tactic discouraged by most economists, who emphasize that bank accounts are reliably insured. “Hoarding money is a reasonable reaction with the prospect of a recession,” says Fulfer. “Even though collective saving deepens a recession — as any Keynesian would tell you — it’s been a common practice historically. During the Great Depression, for instance, people began hoarding gold and cash after the banks failed. Now that we have the Federal Deposit Insurance Corporation and greater trust in the banking system than people had in the 1930s, however, it doesn’t seem likely that people will hoard physical cash. They’ll just keep it in the bank.”

But while the coronavirus might encourage some people to use cards more often, none of this means that a cashless society is imminent. In the U.S. last year, 26 percent of all payments by consumers were made with cash, and roughly 25 percent of Americans are currently either unbanked or underbanked. Many banking experts argue that society remains reliant on cash, and that going cashless in one fell swoop is simply impractical.

As my colleague Adam Elder explained a while back, unless we make some fundamental economic changes, going cashless would devastate much of our population: “Credit — or even a normal bank account — isn’t attainable by everyone. Then when they try to pay for things (bills, etc.) they get gouged by ridiculous money order fees — altogether some of the many ways, poverty advocates say, that the poor stay poor. And China (of course!) is doing some really scary shit with credit, commingling it with citizen profiles to create a sort of ‘social credit,’ whereby your ranking in society is determined by a score. It goes way beyond how quickly and thoroughly you settle your debts. Got friends with low scores? Your score will plunge. Been a bad boy? You may not qualify for travel visas and other basic rights. And good luck getting a decent job. All in all, it’s shaping up to be the stuff of totalitarian nightmares.”

One new episode of the Netflix series Dirty Money foreshadows such problems, exposing how Wells Fargo would sell accounts — sometimes multiple — to customers who hardly had enough money to keep their accounts full. Then, as a result of their diminishing accounts, Wells Fargo would hit them with fees, essentially draining them of what little money they had left. With such systems in place, going cashless any time soon would be a disaster. In fact, for these reasons, New Jersey, Philadelphia and Massachusetts all have laws in place banning cashless commerce.

Then again, going cashless can have benefits. As Pete Markey, CMO of TSB Bank, recently explained at an online festival thrown by The Drum, “More data to help your customers is never a bad thing. We’re already seeing that banks that look at spending habits can advise customers on their next utilities partner, for example. More data, used in the right ways can actually be helpful to customers and help them to make the right decisions.” But, of course, before we can go cashless and reap such benefits, we as a society need to figure out how to hold banks accountable.

So, for now, we find ourselves in an uncertain middle ground between cash and cashless. Today, having only cash is tough, but going cashless opens the world up to loads of problems, too. Hell, even Sweden, the supposed gold standard of going cashless, has had trouble keeping their society to it.

In a recent piece for the Financial Times, Alice Hearing explains that, after losing her credit cards, she struggled to buy food from certain shops, to use public transportation without scrambling to find a station where she could purchase a travelcard with cash and, obviously, to online shop — a lifeline for many quarantined persons. “Being without a bankcard was an inconvenience for me for a few days — but for more than a million other people in the U.K., a cash-only existence is a fact of life,” she writes. “As the coronavirus deepens, this is becoming even more of a social problem.”

In some ways, the conspiracists are right to be concerned: Going cashless is certainly a tricky ordeal. However, for now — and probably for years to come — even if the coronavirus and a fear of germs compels more people to use cards, as our economy struggles in an uphill, shutdown-prompted battle, businesses are going to be forced to take anything they can get. And that includes cash.