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Cashless payments have spiked during COVID-19, but don’t expect paper money to disappear

A new report from financial tech company Square shows that cashless payments rose during the coronavirus pandemic.

Cashless payments have spiked during COVID-19, but don’t expect paper money to disappear
[Photo: Mykola Pokhodzhay/iStock]

A new report from financial tech company Square shows that cashless payments rose significantly during the start of the coronavirus pandemic.

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Traditional cash payments were already seeing a decline as more and more businesses wanted to transition to full credit or virtual payments. As stay-at-home orders disrupted the U.S. economy, many businesses had to learn new ways to serve their customers in compliance with social-distancing guidelines.

According to Square, only 8% of U.S. sellers identified as cashless on March 1. By April 23, that number jumped to 31%. The rapid growth was way beyond what would be considered normal, but then so were widespread quarantines and lockdowns.

Millions of people across the U.S. were forced into new realities due to COVID-19. Businesses such as gyms, hair salons, and entertainment vendors closed in a matter of days to adhere to CDC and government guidelines. Although there were notably many people who protested the prolonged closures, physical business activity ground to a halt throughout much of the country, and Square saw an increase in cashless purchases as a result.

For example, cashless payments for beauty and personal care products jumped to 51% of purchases on April 23 from just 11% on March 1. Leisure and entertainment rose to 48% of purchases from 14% during that same period.

The report also shows that owners believe the U.S. will become cashless in six years. But that doesn’t mean that cash will be obsolete after businesses open: 85% of small-business owners said they will never stop accepting cash at their business, according to a survey commissioned by Square. Many pro-cash advocates worry that a completely cash-free society will disproportionately hurt low-income customers, and some have even pushed for legislation against the idea. Before the pandemic, multiple cities had already moved to ban the use of cash-free retail businesses.

So if you love cash, don’t completely freak out if your go-to store isn’t accepting it at the moment. We won’t be getting rid of those dead presidents anytime soon.

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