What caught my eye this week.

I have mentioned before my group of friends on an email list who’ve been debating Covid-19 since January.

Well, this same group of friends was previously preoccupied by arguing the future of cash.

I think cash use is doomed to dwindle in the West, probably fast. Most of them think that would be terrible.

Now it seems the streams are crossing. It’s becoming clear from the data that cash use has crashed in the Covid-19 era and the knock-on lockdown.

You can’t touch this

I have shares in a bunch of listed and unlisted fintechs and payment companies that have seen their prospects skyrocket since physically touching anything except a bar of soap became oh so 2019.

Some are seeing higher volumes, such as the automated savings app Chip.

Others are taking a short-term hit to their ‘take’ because overall spending is down – but they are seeing more users turn to their products, which bodes very well for the future. Square and Visa are examples here.

The trend is their friend. Just this week I received another press release suggesting UK consumers are increasingly shunning cash.

The release – from a technology and branding company called Toluna – states:

• The use of ATMs has reduced by 36% during the pandemic, mostly because of people not being out and about much but also the [perceived] higher transmission risk of the virus when handling cash.

• Online banking or use of mobile apps and payment methods has increased by 33%.

• Phone banking is down by 5%.

• Those visiting their bank in person is also a lot less now than it was before the pandemic, with branch banking experiencing a 34% decrease.

Rather like the feasibility of working from home seems to have astonished half of UK PLC, the infrastructure for the cashless society was already pretty much in place before many people decided to finally try it.

Fintech to the rescue

I agree with my friends that some marginalized – particularly elderly – communities may not be super-comfortable using the latest fintech app to monitor their finances, or to wave their mobile phone to buy a pint of milk.

But where I disagree is the claim that this is an insurmountable problem.

A determined effort by the government and the private sector could create some kind of universal digital option for those still living pre-2005.

Just a State-issued contactless card and monthly paper statements in the post would do in a pinch.

But of course I’d rather everyone got more ambitious. Because where I really disagree with my friends is when they claim that ditching cash is disempowering from a budgeting perspective.

The power of apps like Money Dashboard¹ leaves counting out coins from a jam jar in the dust.

Indeed even the most humdrum mobile bank accounts are beginning to boast features that were the cutting-edge from whizzy start-ups in East London just a few years ago.

Three valid fears

I do agree with my chums in three respects, however.

Firstly, the cashless digital society is in need of a back-up plan when, metaphorically, the battery runs out.

This could be because I forgot to charge my phone or because a financial service provider is hacked, crashed, or forgot to charge its phones (/servers).

I can think of various ways around this – solutions using biometrics, cryptocurrencies, and short-term (invisible?) peer-to-peer lending.

But until they exist, the case for keeping a wodge of tenners as an option is strong.

Secondly, digital payments are far more friction-free. And it’s true this could encourage more thoughtless spending. However that’s nothing new. We’ve had credit cards for decades. As I say, at least with digital payments you have the potential to build in all kinds of automated checks and balances that you can’t do with dumb cash.

Finally, to lose the cash option is definitely to lose some privacy.

Perhaps that will be the edge case that finally leads to a Bitcoin usage explosion? Not for buying illicit drugs on an Internet backwater, but for paying for more humdrum items that you’d still rather a spouse or the government didn’t see.

Noted

I’ve come around to the view that Covid-19 is going to change more than seemed likely six months ago.

Encouraging the demise of cash is near the top of that list, I reckon.

From Monevator

Our updated guide to help you find the best broker – Monevator

From the archive-ator: Nine underrated tools to help you achieve Financial Independence – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!²

The true scale of London’s economic meltdown – capital faces crisis not seen for generations – ES

Stamp duty cut prompts surge of interest in London commuter belt – Guardian

Chancellor threatens tax raid under guise of a capital gains tax ‘review’ – ThisIsMoney

NS&I net financing target raised from £6bn to a whopping £35bn – NS&I

Trading in misery: beware bedroom Forex traders boasting millionaire lifestyles… – ThisIsMoney

Judging by restaurant traffic, the US is still in a partial de facto lockdown – Calculated Risk

Robert De Niro is broke because of coronavirus, might only make $6m this year – Yahoo

Re-examining diversification: Best/worst performers over four-year rolling periods – Arcadian [h/t AR]

Products and services

Monzo launches a new version of Monzo Plus that pays interest – Which?

Fee war hits its limit with the demise of a [US] ETF that paid you to invest – Yahoo Finance

Want to avoid investing in fossil fuels? Check out the iShares MSCI World SRI Fund – DIY Investor

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade

Zoom mortgages, rates fixed for 30 years, and virtual viewings: the future of homebuying – ThisIsMoney

City flats with outside space for sale [Gallery] – Guardian

Comment and opinion

What do World War 2 planes and investment funds have in common? – Bunker Riley

Buy-to-let: It’s not 1994 anymore – Finumus

It took decades – Humble Dollar

Caught in the rain – The Belle Curve

How much should you save? – Fire V London

Merryn Somerset-Webb: Capital gains tax is a ‘stealth wealth tax’ [Search result] – FT

The 60/40 portfolio’s returns over the long run [US but relevant] – Two Centuries Investments

Seven valuable non-financial assets in retirement – Advance Capital Advisor

Why working from home will not become the new normal – Klement on Investing

The reason equal-weighted index funds have tended to deliver better returns – Morningstar

Wealth inequality and lottery ticket stocks – A Wealth of Common Sense

How a single mum feeds her family-of-three for £9.90 a week each – The Sun

Heads I win [Maths!] – Albert Bridge Capital

Gold trading mini-special

“The day I was asked to buy and sell gold” – Financial Ducks In A Row

Gold record in sight as ETF inflows skyrocket – ETF.com

Gold timers have rarely been more bullish than they are today, and that’s bearish – MarketWatch

Naughty corner: Active antics

Letting go of investment decisions – Worth

Hedge fund titans grab lion’s share of the industry’s spoils [Search result] – FT

Big tech drives the stock market without much US help – Yahoo Finance

You don’t see the whole picture – Party at the Moontower

Covid-19 corner

Hancock orders review of discrepancies in Covid-19 death figures – Guardian

New data on T cells and the coronavirus – Derek Lowe

US shatters coronavirus record with over 77,000 cases in one day – Reuters

New cafe restrictions in Sydney Australia as Melbourne cases spike – Bloomberg via MSN

Stanford doctor: Coronavirus fatality rate for people under 45 ‘almost 0%’… – Washington Examiner

… pre-print from same doctor finds median IFR of 0.24-0.27% using seroprevalence data – medRxiv

There’s apparently a boom in American urbanites buying farmsteads to escape Covid-19 – Modern Farmer

We’re stuck in a lockdown ‘work from home’ purgatory – Wired

Kindle book bargains

The Hidden Life of Trees by Peter Wohlleben – £0.99 on Kindle

The Economics Book: Big Ideas Simply Explained by Niall Kishtainy- £1.99 on Kindle

Alchemy: The Surprising Power of Ideas That Don’t Make Sense by Rory Sutherland – £0.99 on Kindle

When Genius Failed: The Rise and Fall of Long Term Capital Management by Roger Lowenstein – £0.99 on Kindle

Off our beat

“I’ve seen a future without cars and it’s amazing” [Includes cool graphics] – New York Times

Four ways to break up the monotony of your workweek – Fast Company

Asia’s ecosystems were buckling before Covid-19. The future has to be different – CNN

Fifteen ways to be happy – Humble Dollar

How we met: ‘It’s 1,300 miles to Romania – the same as the number of pounds my phone bill was’ – Guardian

Undoing the toxic myth of exclusion and scarcity – Seth Godin

And finally…

“Lost Time is never found again.”
Benjamin Franklin, Poor Richard’s Almanac

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