Pandemic accelerated shift to cashless payments

Pandemic accelerated shift to cashless payments

More data is coming in to verify what many observers already believed to be the case; that the year of the Covid-19 pandemic has accelerated public acceptance of cashless payments, including in places such as Hong Kong and Macau.

The latest evidence comes from a Visa Hong Kong and Macau research report finds that a massive transformation occurred this year within its region of study. In Macau, for example, the local people used cash in 96 percent of their transactions in 2019, but this year the figure plummeted to only 24 percent of financial transactions.

In neighboring Hong Kong, eCommerce also received a boost from the pandemic. Whereas previously about 40 percent of all purchases, measured by value, were made online, this jumped to 52 percent of all shopping expenses, no doubt due to people staying indoors and making efforts to avoid physical contact.

Maaike Steinebach, general manager of Visa Hong Kong and Macau, commented, “The pandemic is propelling the shift towards a cashless society. Besides eCommerce, digital banking and open data will be the twin engines that drive sustainable and responsible digital transformation. With more consumers engaged in digital commerce, we see enormous amounts of financial and personal data being generated and aggregated.”

Visa has found that the coronavirus encouraged more consumers to pay digitally at shops or retailers, and that the Asia-Pacific has led the world in adopting digital payments during the pandemic.

This fact, however, is not entirely the result of other advanced nations being slower to accept new technologies. In the United States, for example, concerns have been raised that cashless payments are discriminatory against low-income individuals without bank accounts or credit cards. As of 2017, about 7 percent of adult Americans did not have any bank account. In order to prevent such discrimination, the state of New Jersey even passed in 2019 a law that prohibited most businesses from going cashless. A number of other US cities have similar ordinances.

At any rate, it is expected that cash purchases will make a partial recovery as the pandemic subsides, but observers are interested to see how much of the shift to cashless payments witnessed in 2020 will represent a permanent change.