Authorities are encouraging the use of electronic payments as a safer measure to maintain social distance and contain the spread of the coronavirus.
The impact of the coronavirus is unprecedented across societies and economies. Hospitals are overwhelmed in Italy and Spain; businesses are struggling to survive the containment measures, while workers are being fired. The EU expects a “severe economic downturn”, but the European Commission has not estimated how low GDP could fall.
The seismic shock caused by the pandemic will also transform how we live and work, many foresee, adding to the great transformations brought by global warming and the digital revolution.
The virus is rapidly changing one of our most common activities: paying.
This change is also being encouraged by the authorities. European Commission vice-president for financial services, Valdis Dombrovskis, wrote on his Twitter account on 26 March: “Tiime to swap your coins for payment cards – safer for containing coronavirus.”
Dombrovskis supported the European Banking Authority’s initiative to facilitate further the use of contactless payments.
The EU’s banking regulator has recommended the use of contactless payments up to €50.
“We encourage all payment services providers to increase contactless payment limits, as allowed under EU law,” added Dombrovskis.
Notes and coins did not help to spread the virus across the planet, as was initially reported by some media. But like any other surface, they could carry viruses and bacterias.
But more than the material itself, authorities recommend electronic payment options to avoid close interaction with people.
Belgian authorities “encourage” the use of electronic payments. “Cash money is not infected, but by paying electronically allows you to respect the social distance,” said the official webpage of the Belgian government on coronavirus.
The changes are already significant in those countries most affected by the pandemic. The strict containment measures are seeing a large increase in online shopping and, therefore, electronic payments.
In Italy, the member state with the highest death toll and number of cases in Europe, the volume of e-commerce transactions has increased by 81% since the end of February, according to estimates by McKinsey & Co.
The transformation is remarkable given that cash rules in Italy.
According to the last figures available, the use of cash for payments by households in Italy was around 86%, while 13% were made with cards and 1% with other payment instruments.
That figure was higher than the euro area average, where cash accounted for 79% of all payments in 2019. In terms of the value of the transactions, cash accounted for a share of 54%, according to the European Central Bank.
Electronic payments still face a number of barriers and obstacles in bricks and mortar shops, and face challenges like cybercrime, fraud and privacy concerns.
But EU institutions believe that the current crisis could represent a good opportunity to overcome some of these issues.
“The opportunities that e-commerce and cashless transactions afford in terms of convenience, efficiency and affordability will help them gain further ground in the years to come; their popularity among younger generations and strong EU-level policy support for digital transformation are also helping boost their prospects,” said a report drafted by the European Parliamentary Research Service in March.
It is still difficult to foresee what the world will look like after the pandemic, how our habits and routines will be affected, and whether some of the changes we have adopted now will take root. But the decrease of cash transactions will likely continue as the world economy is already in the midst of major change driven by new digital payment solutions and players, like apps and E-wallets in our smartphones.
(Edited by Benjamin Fox)