Cash or Card? The Impact of Pandemic
COVID-19 has become a catalyst for the introduction of digital services for the whole world. The payments industry has undergone important changes also—social isolation and recommendations to limit cash use led to the rapid development of electronic payment technology.
According to a study by the Bank of Lithuania, every fourth resident prefers non-cash payment in Lithuania. In 2020, 7 percent of respondents said they did not receive or use cash at all.
The use of cash declines in many countries. The e-commerce boom sharps this trend. Proof of this is the 57 percent growth in operating profit for the e-commerce platform Amazon last year.
McKinsey’s scenario foresees a four to five percent decline in the share of cash transactions globally annually.
Sweden occupied the leading position in the development of electronic payments. This country aims to become the world’s first cashless society in 2023. The main advantages of such an economy are combating money laundering and terrorist financing, reducing corruption, and controlling money.
While in one part of the planet, the pandemic has sped up the introduction of contactless technologies, in another, it has led to an increase in the level of cash circulation.
“Nobody argues about the convenience and transparency of non-cash payments, but electronic payments are not able to completely displace cash from circulation,” says Anton Valinčius, Regional Head of Penkių kontinentų bankinės technologijos (BS/2) in Kazakhstan and Kyrgyzstan, Director of BS/2 Uzbekistan (BS/2 TASHKENT).
The share of cash withdrawals from ATMs increased due to wages and social benefits on cards. The restrictive pandemic measures also had an impact. The increased demand for cash arose in the conditions of self-isolation. People tried to stock up on money to avoid visiting bank branches and ATMs.