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Will coronavirus spell the end of cash?

A Massachusetts law requires retailers to accept cash. Some would rather not

Some retailers want customers to use only contactless credit cards or digital payment technologies like Apple Pay. But that conflicts with Massachusetts law.
Some retailers want customers to use only contactless credit cards or digital payment technologies like Apple Pay. But that conflicts with Massachusetts law.Jenny Kane/Associated Press

Micro Center, the big electronics retail store in Cambridge, is still open for business, despite the COVID-19 lockdown. But the company would rather you left your cash at home.

On its website in early April, Micro Center informed customers that “it is limiting payment options to credit cards/debit cards . . . to minimize physical contact.”

Other merchants also regard old-school paper money as a health risk in the age of coronavirus. For instance, the supermarket chain Hannaford said on Twitter last week that it would refuse cash payments for curbside pickup orders.

Both Micro Center and Hannaford relented in the face of a Massachusetts law requiring retailers to accept cash. But in other parts of the United States, retailers are free to shun paper currency for fear of infection. Financial industry analysts say that COVID-19 will accelerate an ongoing shift from currency to bank cards and smartphones.

“I would think people would be more nervous about using cash because of the germs on it," said Kenneth Rogoff, author of “The Curse of Cash" and an economics professor at Harvard University. “I do think this will deepen the move toward people using credit cards and debit cards.”

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That shift has long been underway as forms of electronic money have multiplied in recent years. In 2019, US consumers used cash in 26 percent of transactions, down from 30 percent two years earlier, according to the Federal Reserve Bank of San Francisco. And the virus has only given consumers and retailers another incentive to shy away from cash.

To be sure, it’s unclear whether handling money is likely to spread the virus.

Ellen Foxman, an assistant professor at the Yale School of Medicine, considers the risk minimal, citing a recent study in the New England Journal of Medicine that found the COVID-19 virus survived on cardboard surfaces for no more than 24 hours.

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“In my opinion this is not a major threat, especially if you are washing hands frequently,” Foxman said. “Theoretically, if you touch any object just after the same object has been handled by someone who is shedding virus, you could get virus on your hands — this applies to doorknobs, elevator buttons, money, and many other items. However, the virus doesn’t last too long on these surfaces.”

But a 2014 study by French and Saudi scientists published in the journal Future Microbiology that studied how long viruses can survive on paper money found that influenza can remain active on currency for up to eight days.

Several countries are taking no chances. The central banks in China and South Korea have treated cash with heat, microwaves, or pathogen-killing ultraviolet light, while the US Federal Reserve is quarantining currency shipments from Asian and European countries for periods of seven to 10 days, to give time for any virus particles to become inactive.

For retailers in Massachusetts, playing it safe by refusing cash altogether may put them in legal jeopardy. State law requires stores to accept US currency, a law that seeks to protect people with low incomes who may lack bank accounts and credit cards. Attorney General Maura Healey underscored this in an April 1 Tweet.

I understand that essential businesses need to take extra precautions right now,” Healey said. “But not everyone has a credit card, and consumers should not face economic barriers to accessing necessary goods and services.”

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When informed of the Massachusetts law by the Globe, a Micro Center official said the Ohio-based retailer would change its policy to accept cash, while urging customers to use credit or debit cards instead. Hannaford also reversed course when contacted by the Globe.

But retailers in much of the United States are free to abolish cash payments. Ryan Fiala, owner of a D.P. Dough Calzones restaurant in Normal, Ill., is providing delivery and takeout service only during the lockdown, for customers who pay online or with plastic. Fiala said he adopted the policy because worried employees were walking off the job rather than risk infection.

“I reached the point where I could ill afford to lose any additional staff," Fiala wrote in an e-mail.

In the United States, cash is heavily used in small-value transactions. Last year, for instance, 42 percent of all purchases costing $25 or less were made with paper money, according to the San Francisco Fed. But this might change if more US retailers and consumers move to smartphone-based payment options such as Apple Pay and Google Pay, which let customers make small purchases with a wave of their phones. However, according to a study by the management consulting firm Bain & Co., fewer than 10 percent of Americans used phone-based payment systems in 2018, compared to 80 percent of Chinese consumers.

Other potential rivals to cash are the “contactless” credit cards common in Europe. With one, a consumer can make small purchases by merely waving a card over a terminal, without having to enter a PIN number.

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Most US retailers don’t accept contactless card payments, though many of them have the necessary card readers.

"In the US we’re behind the curve in terms of payment technology,” said Aaron Press, research director of worldwide payment strategies at IDC Corp. He thinks the virus scare might goad the United States toward contactless payments. “My sense is that it will increase awareness of it and increase use of it,” he said.

Still, nobody is predicting that paper money will ever go away. Indeed, there’s some evidence the COVID crisis may have caused a momentary spurt in demand for hard cash. Rogoff cited a March report in The New York Times that customers of some Manhattan banks were withdrawing large quantities of $100 bills, just as news of the epidemic was causing huge losses on the stock markets.

“People have been predicting the death of cash for years," added Press, "just as they’ve predicted the death of checks. But they just grimly hang on.”


Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him on Twitter @GlobeTechLab.