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Illustration: Aïda Amer/Axios

People have suddenly stopped using money — of the bill-and-coin variety — for fear it may spread the virus. Some worried shopkeepers have stopped accepting it, too.

Why it matters: The coronavirus may have changed our buying and payment habits forever. Online shopping is through the roof, and consumers are rushing to get "contactless" credit and debit cards, which are tapped at a merchant terminal rather than inserted or swiped.

Driving the news: The coronavirus has made us scared to touch anything, and there's a perception that money is dirty and payment terminals carry germs.

  • ATM use is down 32%, according to Visa, and 63% of consumers say they're using less cash.
  • In places like South Korea, bank notes have been disinfected and placed in quarantine.
  • The decline of cash has been particularly pronounced in the U.K., where an article in the Telegraph quoted a W.H.O. official advising people to wash their hands after touching currency.

Yes, but: Health experts say they consider it unlikely that cash is spreading COVID-19 (though hand-washing is always recommended).

The backstory: In March, when many people started sheltering in place and retail locations closed en masse, there was a huge migration to virtual commerce. Merchants that hadn't been online raced to put up web storefronts, and consumers moved the bulk of their shopping.

  • "It's just been like three years of digital commerce growth being pulled forward into three months," Brian Cole, head of North America products & solutions for Visa, tells Axios. "People are making purchases that they would have made in person, but they’re making them online now."
  • The number of active Visa cards being used e-commerce jumped 30%.
  • COVID-19 is "pushing people into e-commerce who would not normally be using it," David Robertson, publisher of the authoritative card industry publication the Nilson Report, tells Axios. "I mean, I have a 90-year-old friend who uses Instacart now."

One practice that has grown common and isn't likely to go away: Paying for something on an app or a website — like a pair of pants or a pasta dinner — and picking it up in the store.

Between the lines: The acceleration of e-commerce and card payments at the expense of cash is convenient for consumers and good for banks, which reap fees on the transactions. But it can be bad for merchants, who pay those fees, and for low-income people who lack bank accounts.

  • Retailers have been in litigation with the credit card networks for decades over the "swipe fees" they owe whenever a consumer pays by card.
  • The fees vary widely, depending on the type of card and size of the merchant, but can typically be 2%-2.5% of a transaction.
  • Despite the growing cost of handling cash (bringing it to the the bank, etc.) "I think most merchants, especially small merchants and small-transaction merchants, would still prefer to take cash," K. Craig Wildfang of the law firm Robins Kaplan, who represents retailers in an ongoing lawsuit over swipe fees, tells Axios.

The catch: Not everyone has access to credit or debit cards — especially low-income people. Retailers like Sweetgreen have tried going entirely cashless only to see pushback from advocates for the poor.

  • The city of Philadelphia now has a law requiring all stores to accept cash.
  • People who rely on cash tips also suffer when currency isn't in wide use. (David Gelles of the New York Times discovered this when he experimented with living cash-free, and found himself guiltily stiffing his barber and a hotel valet out of a tip.)

The next big thing: contactless cards. They're pervasive in Europe and elsewhere, and are just starting to hit the U.S. in a big way — and, for the first time, consumers are demanding them.

  • People who use Apple Pay and Samsung Pay on their phones have gotten accustomed to paying with a wave.
  • The credit card networks have always promoted electronic payments as faster and more efficient — and now, with COVID-19, they're promoting them as cleaner and healthier.
  • Burger King ran a recent commercial in which it touted its contactless payment option.

The bottom line: As bad as things have been, life during COVID-19 would have been much worse for so many people without the ability to buy goods online and have them delivered, notes Linda Kirkpatrick, Mastercard's president of U.S. issuers.

  • "I can’t imagine if this happened 55 years ago before our network was created," she tells Axios. "We would be in a very very different place."

Go deeper

Updated Sep 22, 2020 - Axios Events

Watch: How cities are preparing for an increasingly digital economy

On Tuesday, September 22 Axios' Erica Pandey hosted an event on how cities are building stronger, more efficient operations to support an increasingly digital economy, featuring Dunkin' Brands CFO Kate Jaspon and FCC Commissioner Jessica Rosenworcel.

Kate Jaspon discussed trends in Dunkin' Brands' customer digital transactions and how they're promoting their brand across younger social media platforms like TikTok.

  • How coronavirus has accelerated the move towards a contactless food experience: "We're seeing a lot of guests shift away from cash and actually move to these contactless payments."
  • On the company’s successful partnership with TikTok star Charli D’Amelio: "We've seen a significant number of app downloads and perk memberships come from her demographic and her following, as well as an increase in our cold brew sales since we launched."

Jessica Rosenworcel unpacked the future of smart cities, how new technology can be better integrated into public spaces, and the need for the federal government to better collaborate with city mayors.

  • On cities being able to predict things like fires, safety hazards: "Wouldn’t it be fantastic if we knew those kinds of things well in advance, if we had a predictive ability that exceeds what we have today because we are looking at patterns at a scale that previously we haven’t been able to do? I think that those things are real and they are not so in the far-off future."
  • On partnerships between the federal and local governments: "We've got to figure out how to be partners with mayors and town councils...I think right now they see federal authorities as someone who wants to take their power away and prevent them from having a say and where communications infrastructure goes on their streets in their backyards."

Axios co-founder and CEO Jim VandeHei hosted a View from the Top segment with Visa Chief Product Officer Jack Forestell who discussed changes in digital commerce and what this means for the economy.

  • On digital shopping experiences being the new norm for small businesses: "What we have seen with the pandemic is a sharp uptick in digital commerce...But what we're seeing now is that the new set of digital commerce behaviors is really sticking. The implication is that small businesses, Main Street businesses, really need to get digital."

Thank you Visa for sponsoring this event.

Dan Primack, author of Pro Rata
8 hours ago - Technology

TikTok gets more time (again)

Illustration: Aïda Amer/Axios

The White House is again giving TikTok's Chinese parent company more to satisfy national security concerns, rather than initiating legal action, a source familiar with the situation tells Axios.

The state of play: China's ByteDance had until Friday to resolve issues raised by the Committee on Foreign Investment in the U.S. (CFIUS), which is chaired by Treasury secretary Steve Mnuchin. This was the company's third deadline, with CFIUS having provided two earlier extensions.

Federal judge orders Trump administration to restore DACA

DACA recipients and their supporters rally outside the U.S. Supreme Court on June 18. Photo: Drew Angerer via Getty

A federal judge on Friday ordered the Trump administration to fully restore the Deferred Action for Childhood Arrivals program, giving undocumented immigrants who arrived in the U.S. as children a chance to petition for protection from deportation.

Why it matters: DACA was implemented under former President Obama, but President Trump has sought to undo the program since taking office. Friday’s ruling will require Department of Homeland Security officers to begin accepting applications starting Monday and guarantee that work permits are valid for two years.