Cash and the Coronavirus

MoneyTrend: Adapting to a COVID World

From Safety to Hoarding, Americans Have a New Perspective

BY VIK DEVJEE

When the coronavirus pandemic began its relentless march across the globe in early 2020, it altered routines and shifted behavior. Americans hoarded toilet paper, worked from home, distanced from others, baked bread at an unprecedented rate, and disinfected everything in sight. Consumers and businesses also started viewing, handling, and using cash differently.

SAFETY CONCERNS

Early reports that the coronavirus could survive on paper and metal surfaces caused considerable worry among consumers and retailers. Health experts quickly clarified that the risk posed by handling a paper note or coin is no higher than touching other common surfaces. Doorknobs, cell phones, handrails or credit cards are just as likely to retain viral matter. To quell fears, the Federal Reserve took steps to make sure the money supply was not contaminated. From late February 2020 on, notes returning through the banking system from Europe and Asia were quarantined for seven to 10 days. As the pandemic spread, person-to-person behaviors and activities proved to be much more dangerous than handling cash. Despite the minuscule chance of contracting the virus through notes or coins, some businesses refused to accept cash and shifted to digital or card payments.

STASHING CASH

When stay-at-home orders took effect across the country, many people went into a hurricane-preparation mode. Americans swept the shelves clean of toilet paper, canned foods, medicine, and cleaning supplies. They also began hoarding cash. From March 11 to March 18, U.S. banknotes in circulation shot up at a rate not seen since late 1999, when fear of the Y2K bug sparked a frenzy of withdrawals. Banks around the country reported large withdrawals of cash made by nervous customers. In particular, wealthier customers wanted substantial sums in hundred-dollar denominations. Some U.S. financial institutions’ vast denomination reserves were temporarily depleted as people took comfort in having tangible banknotes on hand.

The coronavirus pandemic also caused a nationwide coin shortage that began in June. Stores, banks, and other businesses get most of their coin supply from the Fed’s regional banks or customer exchanges. During the lockdown, stores and bank lobbies were closed, and coin-sorting kiosks saw reduced traffic. As a result, a significant percentage of coins languished in homes, pockets, and dresser drawers instead of circulating through the U.S. economy.

As the economy recovers, much of this hoarded cash and coin supply will likely make its way back into the economy through retail transactions or bank deposits.

POST-PANDEMIC CASH HANDLING

In a post-pandemic economy, retailers must reevaluate their business processes across the board. One of those processes is the way cash is accepted, handled, and reconciled. Although there is no proven danger in touching money, the current sentiment favors cleanliness, safety, and hygiene. If a consumer or worker feels that the cash transaction process is unhygienic, there is nothing gained in trying to convince them otherwise. The visible measures that a business takes to keep everyone safe may become a critical factor in customer/employee satisfaction and loyalty. How can retailers provide a clean and safe experience for customers and frontline workers, particularly when it comes to cash handling? The most impactful and efficient solution is automation.

Consumers are increasingly embracing self-service options to reduce unnecessary contact with strangers. Automated cash-handling machines are readily available and come in a wide range of configurations to suit almost any kind or size of business. Back-office cash recyclers take over the task of manually preparing and reconciling tills, and require fewer staff to complete the job. At the front of the store, retailers can deploy consumer-facing cash-handling technology at the POS or selfservice kiosks that incorporate the same cashhandling technology. Workers never touch the cash because self-service recyclers (either at POS or in kiosks) can accept notes and coins, then return change directly to the customer. Retail banks also face cash-handling challenges as they reopen. Bank employees tasked with sorting, counting, and reconciling cash will demand enhanced protections and safety assurances. Their exposure to handling large volumes of money can be drastically reduced with teller cash recyclers. Automation is the simplest way to reduce the number of cash touchpoints between customers and workers.

CASH ISN’T GOING AWAY

Most consumers can select from a range of payment options, but there are an estimated 20 million underbanked or unbanked people in the U.S. whose only option is to pay with cash. To protect these consumers, a growing number of cities and states have banned, or are considering bans on cashless brick-andmortar stores. It remains to be seen whether the coronavirus will alter this trend.

Cash payments can be used by anyone, regardless of social status, financial standing, creditworthiness, age, nationality or technological ability. No registration, fee, password or membership is needed to spend or accept it, and cash carries no risk of cybercrime, leaked data or breach of privacy. The question is not if cash will continue to be used for daily retail exchanges, but how businesses can efficiently and safely manage the transactions.

Vik Devjee is the Vice President of CIMA Cash Handling America, a global provider of cash solutions. He has more than a decade of experience in the industry and has worked with the retail, banking, and hospitality industries to implement cash-handling solutions. Devjee may be contacted at 832-974-4820 or vik@cima-america.com.