Home » Economy » COVID-19 has more people going cashless. Will dollar bills go out of style
COVID-19 has more people going cashless. Will dollar bills go out of style
December 31, 2020
The dollar may be almighty but with COVID-19 circulating, its physical form is perhaps less useful than ever before.
Many businesses, particularly restaurants, in Colorado and across the nation have gone cashless amid the pandemic to cut down on contact points between the customer and service provider. Try spending a $100 bill these days and more than a few retailers will politely ask you to put that strange looking greenback away and insert your card in the chip reader. (Or tap it, for those with even more advanced credit cards.)
As with many other trends that existed before the virus — working from home, shopping online — the pandemic has acted as an accelerant on the cash-free lifestyle trend that already had traction. A survey performed in August found that a majority of Americans are ready to give up cash for good even after the pandemic subsides.
“COVID-19 has caused many to re-evaluate the way they approach paper bills and coins out of concern for their health and safety,” Kylie Moore, a content strategist with Digital Third Coast wrote of the survey, which her company performed on behalf of Southern California-based Travis Credit Union. “Thus, the possibility of a cashless future has never felt more real.”
The Travis Credit Union survey reached more than 2,000 people across the country from Aug. 20-21. Roughly one in three people surveyed said they preferred to use cash when paying for things, while 59% say they preferred their credit or debit cards, which were viewed as more convenient and safer.
It found that during the pandemic, 50% of people say they are using cash and coins less. Fifty-eight percent of people survey said the U.S. should move to a cashless financial system.
“It’s not hugely surprising that half of Americans are using less cash during COVID,” Moore said of the survey’s findings in an interview with The Denver Post earlier this month. “But we were surprised that find that three in five planned to stop using it entirely after COVID-19.”
Especially surprising to Moore: It’s not just Millennials planning to ditch dollar bills. More than half of respondents who are part of Generation X said they planned to transition and two in five Baby Boomers did too.
Denverites Steve and Amy Angeles, both in their 50s, got a taste of the cashless economy on the slopes in Breckenridge earlier this month. Amy put $20 in her snow pants for purchases on the mountain only to find none of the vendors would take it.
“I’m OK with not using cash,” she said. “I do feel guilty though if it’s for something under $5. And it’s true that if I see someone who is homeless, I often have nothing to give them.”
Steve said he pays for things with cards most of the time too but, “I do feel like small businesses get screwed in the transaction sometimes.”
Don’t worry about the impact of card processing fees when buying a latte or pastries at Denver’s Blue Sparrow Coffee, owner Jeffrey Knott said. He’s done that math and it’s cheaper for him than dealing with cash.
Knott, who worked as an investment banker before embracing his love for coffee, said cash has always been a drag on his shops’ efficiency.
It takes time to make change in cash transactions, something that matters in a high-volume business like coffee. It takes time and effort to balance cash drawers at end of a day. Mistakes and shortages are common. It takes time to go to the bank to make deposits.
Even before the pandemic, a vast majority of transactions inside Blue Sparrow’s two locations were made with credit or debit cards. Since the onset of the pandemic, Knott has gone cashless and hasn’t looked back.
“I think going cashless can help out a lot of small businesses,” he said. “It’s a more accurate, easier business to run with similar or better margins.”
Of course, going cashless, like the pandemic itself, has disparate impacts on different populations.
State Rep. Alex Valdez, D-Denver, plans to pursue a bill in the Colorado legislature that will make it illegal for businesses not to accept cash, CBS4 reported earlier this month, a measure that would follow in the footsteps of several other states. Valdez said the measure is about fighting discrimination, according to CBS.
A Federal Reserve System study found that in 2018, 6% of American families did not have bank accounts. Families making less than $40,000 per year were the most likely to be unbanked, at 14%. Black people and Latinos were also more likely than white people to not have bank accounts, at ratios of 14% to 4% and 11% to 4% respectively.
While Knott would like Blue Sparrow to go cashless permanently, he is looking for an in-house workaround to allow people without bank accounts to keep using cash, perhaps by allowing people to buy gift cards with cash.
Moore said that a cashless system runs the risk of creating an uneven economic playing field. Her survey found that the national coin shortage created by the pandemic disproportionately impacted lower-income people and minority groups.
“That’s something that we need to watch for,” Moore said.