The Effect of COVID-19 on Cashless Payments

The outbreak of the SARS-CoV-2 coronavirus (COVID-19) has impacted the whole world. To stop the virus’s spread, governments enforced regulations requiring face masks and social isolation and also promoted social seclusion, hand-washing, and other hygienic measures. People’s movements and consumption were significantly reduced as a result of government-imposed lockdowns, with internet purchasing overtaking in-store purchasing in a particularly noticeable way. Most importantly, people’s habits during times of restrictions and lockdowns seemed to reduce overall desire to do cash transactions. Cashless transactions became the most preferred option for daily payment as it helped reduce contact with others and prevent them from becoming infected. These factors contribute to future intentions to eliminate cash payments once the pandemic is ended as well as the choice of payment methods currently in use. Even after the pandemic, people are using digital cashless payments for their daily transactions. This study investigates the impact of the coronavirus on consumer demand for cash and cashless payments during the COVID-19 crisis and beyond. This study utilizes the secondary research method by employing the annual statistical report of European Central Bank (ECB) (2021). The data were extracted from the warehouse of ECB, and rigorous analysis was performed to assess the intentions of customers for using digital transactions for payments. In the study, a regression analysis shows that a greater increase in the number of cards used for payment per year occurred during the COVID-19 pandemic than before the pandemic. The study demonstrates that there was a significant correlation between the adoption of cashless payment systems and the restrictions imposed on consumers because of the pandemic. Customers prefer cashless transactions when there is a higher danger of infection while handling cash.

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