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The Bank of Korea (BOK), South Korea’s central bank, is now keeping all cash it receives from local banks in a safe for two weeks because the coronavirus generally dies out during that time, according to Reuters.
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The country is also reportedly tightening its processes for incinerating bank notes that might be infected or otherwise dirty as the outbreak spreads. The BOK will also continue using its standard process for disinfecting cash before putting it in circulation, in which it heats notes to 150 C (302 F) and then leaves them at 42 C (108 F) after they’re packaged.
These efforts reflect growing concerns about cash’s ability to spread the coronavirus. Cash can carry hundreds of species of microorganisms, so some entities are trying to limit its use to combat the outbreak. Chinese banks were previously required to only release bank notes that had been sterilized and to store potentially infected cash for one to two weeks, per CNBC. Additionally, the country put a stop to cash transfers between provinces. And the concerns have reached a global scale, with the World Health Organization (WHO) advising consumers to use contactless payments over cash when possible.
Precautions and restrictions surrounding the usage and availability of cash could bolster digital payments adoption, but payments firms may still face losses because of the outbreak.
The quarantining and incineration of cash, combined with recommendations to not use cash, could convince consumers to make payments through other methods. If governments continue to store or destroy potentially infected cash, there could be less cash in circulation, making it harder for consumers to make cash payments.
And if consumers are concerned about the spread of the virus and heed the WHO’s advice, they’ll make a point to avoid using cash until the outbreak subsides. This could mean that consumers around the world turn to cards, devices, and other payment methods to limit their exposure to cash, boosting digital payments adoption globally.
Even if the outbreak popularizes noncash payments, it could still hurt digital payments firms’ performances because it may lessen overall spending. Many US consumers are already avoiding public venues like malls and stores, likely lowering their in-store spending.
So, concerns about cash may mean payments firms will see some spending shift to digital payment methods, but ultimately may cause their overall volume to drop. And payments firms certainly appear to be gearing up for coronavirus to hurt their performances, as Mastercard, PayPal, and Visa have all signaled that the outbreak may negatively impact their future revenues.
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