Coronavirus Rush for Contactless Payments Risks Worsening Inequality
(Bloomberg) -- Contactless payments have become more popular during the coronavirus pandemic, with wide-ranging implications for low-income households who chiefly use cash, according to the Bank for International Settlements.
While the rise of digital payment systems meant buying groceries and other activities could continue online during the lockdown, “due to unequal access, low-income and vulnerable groups face difficulties in paying or receiving funds,” the Basel-based institution said in its Annual Economic Report.
Some central banks said the trend could burden those who cannot access new technologies. New Zealand’s central bank in March flagged that shops declining to accept cash payments might disadvantage the young, elderly, poor or disabled.
It’s not just payments that are having an impact on inequality during pandemic. Poorer U.K. households were more likely to have eaten into their savings and increased their debt, most commonly with credit cards that carry high interest rates, a Resolution Foundation study found.
The social divides exposed by the pandemic helped fuel the racial justice protests in the U.S. and across the world this year. Raphael Bostic, the Federal Reserve’s first Black president, urged policy makers to do more for the disadvantaged.
“The crisis has amplified calls for greater access to digital payments by vulnerable groups and for more inclusive, lower-cost payment services going forward,” the BIS said.
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