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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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July 25, 2022

Paper and Digital: The Two-Part Approach to Hurricane Preparedness

It's Atlantic hurricane season. Depending on where you live, you might choose to get some extra cash to weather uncertain times. If you're like most people, though, you'll sit tight. Most consumers don't get extra cash in advance of predicted extreme weather. For example, in advance of Hurricanes Matthew and Harvey/Irma in 2016 and 2017, no more than two in 10 consumers in the path of these storms reported getting more cash compared to their everyday practices for managing cash, according to ad hoc analysis of data from the Survey/Diary of Consumer Payment Choice.

Few consumers getting extra cash is surprising, because the aggregate demand for cashOff-site link increases in areas threatened by or experiencing weather emergencies. How could cash demand increase so notably when few consumers were getting more? It turns out that the relatively small share of consumers who chose to get more cash got quite a lot more cash. They didn't just run to the ATM and take out an extra $20. They ran to the ATM and got three times the median ATM withdrawal.

For the Matthew and Harvey/Irma years, the Survey/Diary of Consumer Payment Choice found that the median amount of a cash withdrawal in October 2016 and 2017 by US consumers was $60. Before Hurricane Matthew, people in the path who withdrew extra cash took out a median of $250, and before Harvey/Irma, $200. This means some people getting a lot of cash—more than three times what is typical—rather than most people getting a bit more cash runs up demand for cash when weather emergencies are predicted.

Seven of 10 consumers who got extra cash in advance of Matthew or Harvey cited multiple reasons for their choice, mostly related to the loss of electric power: in case noncash methods of payment would not work, it would be harder to get cash during or after the storm, or they lost access to banking services. In addition, more than half who got extra cash said they were preparing for the possibility they would need to evacuate from home.

If you have to leave home, paper cash is essential, but so are electronic resources, as we were reminded watching Katrina's Classroom video file, four financial education videos from the Atlanta Fed. According to the Survey of Consumer Payment Choice, most US consumers have a bank account—93 percent in 2020—and have the tools for bank account access away from home: debit cards (85 percent), online banking (79 percent), and mobile banking (64 percent). In the aftermath of Katrina, these digital tools made it possible to receive payments, keep current on bills, receive emergency aid, borrow—and, yes, get cash—while away from home.

Just one more reason that access to the digital economy Adobe PDF file format is important for everyone.

The Federal Reserve Banks have contingency plans in place to continue digital operations and provide paper cash in emergencies. For your reference, here is the Atlanta Fed 2022 Hurricane Season Preparation information Adobe PDF file format for financial institutions. We hope you won't need to activate your personal hurricane emergency plan, but if you find yourself in the path, it is best to be prepared.