Contamination fears from banknotes and electronic keypads are fueling a surge in electronic payments, and governments are keen to encourage the trend.
Contamination fears from banknotes and electronic keypads are fueling a surge in electronic payments, and governments are keen to encourage the trend.
In these pandemic conditions, it’s a way to do business without personal contact. “Time to swap your coins for payment cards,” tweeted Valdis Dombrovskis, the European Commission’s vice president for Financial Services. “[It’s] safer for containing coronavirus.”
With people stuck at home doing their shopping online, it’s a natural transition. In Italy, the volume of Italian e-commerce transactions grew by 81% in March, estimates McKinsey. A study by payments firm ACI Worldwide found that the volume of online transactions for retailers was 74% higher in March, year-over-year.
Central banks and regulators are encouraging payment service providers to increase the limits on contactless payments. The EU proposed a €50 ($54) limit across the region, and the UK raised its limit from £30 to £45 for each transaction. In Saudi Arabia the monthly transfer limit for e-wallets has been doubled to more than $5,000, while elsewhere providers like Kenya’s M-Pesa reduced transaction fees.
Going cashless may solve some problems but create others. South Africa’s Reserve Bank announced it was not withdrawing physical currency after criminal gangs carrying false IDs started going from house to house collecting “infected” notes.
And what about people who don’t have the tools for digital payments? Central banks have responded by trying to bolster confidence in cash even as they promote cashless systems. The Bank of Canada asked retailers not to go completely cashless, and Germany’s Bundesbank advised that transmission risks through handling notes is minimal.
