[Asia Economy Reporter Kim Eun-byeol] As the novel coronavirus infection (COVID-19) spreads, cash usage has further decreased, while contactless and non-face-to-face payments are increasing. There is also a growing expectation that the spread of COVID-19 will act as a catalyst accelerating the use of digital currencies and central bank digital currencies (CBDCs).
On the 5th, the Bank of Korea stated, "Since the spread of COVID-19, awareness of the safety of payment methods and the increase in online consumption have expanded contactless and non-face-to-face payments," adding, "Sales of 13 online retailers in Korea increased by 10.2% in January and 34.3% in February."
According to data compiled by the Ministry of Trade, Industry and Energy, payment amounts at online companies such as Coupang (WiseApp and WiseRetail) also increased. Coupang's payment amount rose from 1.44 trillion KRW in January to 1.63 trillion KRW in February. eBay Korea increased from 1.26 trillion KRW to 1.44 trillion KRW, 11st from 730 billion KRW to 820 billion KRW, and SSG.com from 390 billion KRW to 450 billion KRW. These figures are estimated based on credit cards, debit cards, account transfers, and small mobile payments by individuals aged 20 and over.
This phenomenon has also appeared overseas. In the United States, after the outbreak of COVID-19, 30% of consumers began using contactless payment methods such as NFC cards and smartphones, and 70% responded that they would continue to use them even after the pandemic ends. A survey by L.E.K Consulting in the U.S. also showed that consumers' online consumption increased by 10-30%. In Germany, the proportion of contactless payments among total card usage exceeded 50% after the COVID-19 outbreak, an increase compared to 35% before the pandemic.
Many countries such as the United Kingdom, Ireland, and Canada have recently raised contactless payment limits to encourage the use of non-face-to-face payments. Mastercard plans to raise contactless payment limits in 29 countries in response to some countries increasing their limits.
Overseas, concerns about COVID-19 transmission through cash have led to a sharp decline in cash usage. LINK, the operator of the ATM network in the UK, recently announced that cash usage in the UK has decreased to half its previous level. Some tourist sites and stores, such as Amazon India (during the 21-day nationwide lockdown), the Louvre Museum in France, and Costa Coffee in the UK, have banned cash payments.
In some countries, the closure of commercial bank branches or restrictions on ATM usage have increased the likelihood of limited access to cash.
There are also expectations that COVID-19 will accelerate discussions on the necessity of digital currencies, but the Bank of Korea emphasized the need to consider side effects such as digital exclusion. The Bank of Korea stated, "The Bank for International Settlements (BIS) emphasized that CBDCs should be designed considering resilience to widespread shocks such as global pandemics or cyberattacks and high accessibility to the general public."
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