Central banks push contactless payments to counter COVID-19

By on 25/03/2020 | Updated on 24/09/2020
More and more governments, central banks and retailers are taking steps to encourage contactless payments amid the coronavirus outbreak. (Photo by Ian Hall).

Government authorities in a growing number of countries, including Kenya and Ireland, are taking actions to encourage contactless payments as the coronavirus pandemic escalates.

The moves come as governments worldwide seek to encourage ‘physical distancing’ and heighten awareness of the germ-carrying properties of inanimate objects. There are concerns that coronavirus could be spread by paper money and coins.  

The Central Bank of Kenya (CBK) has announced numerous measures, including the quarantining of banknotes and encouraging cashless payments. The Central Bank of Ireland has temporarily prohibited the public from exchanging old or damaged banknotes, while the country’s finance minister has asked the banking industry to increase the maximum limit on contactless payments. Meanwhile South Africa’s central bank has been forced to try to thwart door-to-door scammers reportedly claiming – falsely – that the bank is ‘recalling’ money from the public.

Kenya encourages cashless transactions

The number of cases of coronavirus across Africa is relatively low – just over 2,400 at last count – but is rising quickly and concerns are mounting about the potential impact of the virus on the world’s poorest continent.

Announcing measures aimed at cushioning Kenya’s economy from the pandemic, Central Bank of Kenya governor Patrick Njoroge announced that cash collected from banks will be quarantined for at least one week. “This is enough time to ensure the virus is inactive,” Njoroge said, as reported by Capital Business. The governor has also encouraged the use of cashless transactions to reduce the physical handling of money, agreeing with banks to waive mobile-money transfer charges until 30 June in the push for cashless payments.

“In order to avoid the risk of transmission through physical handling of money, we encourage the use of cashless transactions such as mobile money and credit cards,” Kenyan president Uhuru Kenyatta said. “We appeal to mobile operators and banks to take into consideration the situation, and reduce the cost of transactions during this period.”  

Global Government Forum reported last week how government authorities in the US, South Korea and China have incorporated new policies on physical cash into their coronavirus responses. The US Federal Reserve has been quarantining dollars repatriated from Asia before recirculating them, as a precautionary measure; in South Korea, the country’s central bank has been removing bank notes from circulation for two weeks to remove possible traces of coronavirus; and earlier measures in China have included ‘deep cleaning’ and destroying potentially infected cash.

In Europe, the Central Bank of Hungary (MNB) has also recently started quarantining Hungarian forint bills. According to local reports, it is removing them from circulation for a fortnight then shrink-wrapping them and heating them to 160-170 degrees Celsius.

UK and Ireland among countries raising contactless limits

In the UK, it was announced this week that the contactless limit for in-store spending is to increase from £30 to £45 (US$35 to US$53) from 1 April, although retailers have said that it may take some time for the new limit to come into force everywhere.

In Ireland, the country’s finance minister, Paschal Donohoe, has asked the banking industry to increase the limit on contactless payments from €30 to €50 (US$33 to US$54). Donohoe made the request in order to minimise the handling of cash. Reports have said that the move will be rolled out in stages. 

Elsewhere in Europe, the contactless limit for PIN entry has also been raised in countries including the Netherlands, Hungary and Norway.

And a growing number of retailers are shunning cash as the coronavirus spreads, with many food-and-drink outlets – if they have not temporarily closed – advertising themselves as cash-free.

Scam opportunities

Meanwhile, in a statement issued last week, South Africa’s central bank has alerted to the public to scammers claiming they are central bank officials sent to ‘recall’ money from the public. The central bank said that criminals carrying fake SARB identification are visiting homes and telling people their banknotes have been contaminated with coronavirus, collecting the cash and issuing fake receipts. “The SARB has neither withdrawn any banknotes or coins nor issued any instruction to hand in banknotes or coins that may be contaminated with the virus,” the Pretoria-headquartered SARB said in a statement. “There currently is no evidence that the virus is transmitted through the use of banknotes and coins. The SARB continues to encourage members of the public to follow basic hygiene practice and clean their hands often.”

About Ian Hall

Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.

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