Is cash a dirty word when making international money transfers?
For a significant number of people living and working in foreign countries, being able to send money home to friends, family and loved ones is a key motivator for making the move in the first place.
Of these, a large proportion will choose to send cash to be picked up by their beneficiary, rather than using bank transfers or other digital means. Unfortunately, Covid-19 is having a very real impact on services that immigrant workers rely on, in part due to worries that money itself is a vehicle for the spread of the virus.
Let’s take a look at the health risks associated with sending cash home, what the situation actually is, and what the future might look like for money transfer going forward.
Cash in the time of COVID-19
The global nature of Covid-19 has led to a widespread public concern that cash is unsafe to use because it might be a way for the virus to pass from one person to the next. Internet searches for “cash” and “virus” have increased hugely in countries while media queries to banks related to the safety of cash have also reached a record high in the past few months.
According to LINK, the ATM network, cash withdrawals have dropped by 60% during lockdown. In response to this instant bank deposit is booming as more customers choose to send money home via digital channels.
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According to a recent report by the Bank for International Settlements (BIS) the good news is that to date, there are no known cases of Covid-19 transmission via banknotes or coins and it is still unclear as to whether transmission happens more often via objects or simply through close physical proximity.
According to the Bank of England, “the risk posed by handling a polymer note is no greater than touching any other common surfaces such as handrails, doorknobs or credit cards”. Several other central banks, including The Bundesbank and the South African Reserve Bank, have echoed this and are not removing cash from circulation.
Others — like The People’s Bank of China, and central banks in South Korea, Hungary and Kuwait — are taking further precautions and sterilising and quarantining banknotes to ensure they are virus-free.
The current cash conditions
Whatever the situation might be with regards to the transmission of coronavirus via banknotes, the reality is that the impacts of the Covid-19 pandemic are far-reaching and very real. Having never faced a global crisis on this scale before, the responses are rooted in trying to do the right thing without really knowing what that might be. In the past, cash flow has often increased due to unreliability of income sources and a desire to not rely solely on banks. This time around, early data shows that cash withdrawals are slowing down in many countries.
Therefore, across the world, money transfer agents have been closing or reducing their cash pick-up services to minimise risks related to handling money. Different countries are responding to the crisis in different ways: in Bangladesh and Nigeria cash pick up hours are restricted; Colombia is on full lockdown, meaning individual providers hours are varying; and only certain providers in The Philippines are affected with others carrying on as normal.
The important advice at this time is to use digital services where possible. Of course, this is not always possible, and if you are looking to transfer money for a cash pick up it is wise to check your usual routes to make sure how they are functioning.
Longer term the issues with cash pick up are likely to end, with Small World aiming to ensure a move to business as normal as soon as it is viable.
The future of cash
At this point in time, it is very difficult to predict how the landscape is going to look in a few months' time, given the uncertainty that the global market is facing now. But it is certain that digitalising money, and perhaps moving towards central banking digital currencies, will become a priority for many countries, with a small number aiming to be cashless by 2022. The responses will vary from country to country in their move towards digitalisation or their calls for a strengthening of cash within their financial infrastructure.
Fundamentally, the most important thing is that methods of payment and remittance — whatever they may be — remain diverse and are resilient against a wide range of economic threats. Covid-19 is giving us a crash course in what this may look like moving forward. The financial landscape is changing on a day by day basis, so for more information about how Covid-19 is impacting money transfer in different countries click here.