Can spending money in your pocket have the potential to spread covid-19? That question has never appeared in the news, but many governments and leaders in the digital payments industry are wondering how this virus could affect cash usage. Several countries have already taken drastic measures to limit the spread of bank notes. Would such an intervention lead to the end of cash payments?

China, South Korea and the US Federal Reserve have started quarantining or disinfecting banknotes. It is well-known that currency in circulation can serve as a vehicle for transmitting virus, though the potency of pathogens transmitted via cash remains unclear. The human influenza virus, for example, can remain alive and infectious for more than two weeks on banknotes.

It’s possible that these governments are simply taking extreme precautionary measures. It’s also possible that physical currency can indeed be a significant transmission medium for highly infectious diseases such as covid-19. A local branch of the People’s Bank of China in Guangzhou has even opted to destroy banknotes that have been in circulation in high-risk settings such as hospitals or wet-markets.

There’s no doubt that covid-19 will accelerate the pre-existing trend towards digital payments in Asia. China, where digital payments are already prevalent, covid-19 could be a significant driver for the total elimination of cash. In 2018, nearly 73% of Chinese internet users made online payments (up from 18% in 2008). According to a recent survey by Deutsche Bank, this increase is partly driven by young people who are typically more open to adopting new technologies. China and Southeast Asian countries have much larger young populations than Europe and the US.

Western countries have tended to move at a slower pace towards digital payments than, for example, China. Part of the reason for this lies, according to Deutsche Bank, in different payment cultures of countries. A third of the people in OECD countries consider cash to be their favourite payment method, and more than half believe cash will always be around. Citizens in many European countries (notably Germany) and those in the US have a marked preference for cash. But even in Western countries that share similar payment cultures we can observe variation in digital preparedness.

It is too early to conclude what the changes might look like in each cultural, demographic, and institutional context, but we can be sure that covid-19 is already reinforcing existing trends towards increased digitisation of payments.