By Ben Steverman and Margaret Collins. Bloomberg’s Steverman and Collins report from New York and Hoboken, N.J., on the post-storm no-credit-card economy.
Cash-poor residents facing blackouts and looking to stock up on batteries and flashlights in Hoboken, N.J, are out of luck. At the darkened City Paint and Ace Hardware store, business was cash only. The same situation prevailed at the Aspen Marketplace specialty food store nearby, where an employee stood outside announcing:
“Cash only! No lights! Big line!”
With electricity scarce in badly flooded areas like Hoboken, and many ATMS knocked offline, “people desperately need cash,” says Jarl Dahlfors, chief executive of the U.S. operations of Loomis AB, one of several major armored car companies that banks hire to deliver cash to ATMs. After disasters, when credit cards aren’t working and people stock up on food and supplies, the volume of cash needed rises dramatically, Dahlfors says, even in areas where ATMs are working. “It’s just a matter of making sure society can continue to operate.”
Some storm survivors are turning to friends and neighbors for help. Yesterday, Hoboken resident Jeanne Boutton lent $25 to a neighbor who’d run out of cash. “Today, I had a $100 emergency bill in a safe at home,” she says. “It’s been there for years.” On the way back from the grocery store where she spent that bill, Boutton said she worried about running out of cash before power is restored.
Banks have software that closely monitors cash levels at ATMs, and dispatch armored cars when they run low. Unfortunately, that doesn’t work if ATMs aren’t working, bank branches are shuttered and armored cars can’t get around. An ATM’s “two biggest enemies are power outages and downed communication lines,” which connect ATMs to their bank network, says David Albertazzi, a retail banking expert and senior analyst at the Aite Group. To those usual disaster woes, this storm adds widespread flooding: Wet cash is considered “contaminated” and must be recycled.
Armored cars from Dunbar were out “in full force” in the New York area on Wednesday, spokesman Sean Gibbons says. Spokesmen for other armored car companies said they were also making deliveries on Wednesday, even if it’s unclear what conditions they will encounter. “We will be replenishing those ATM machines as quickly as possible,” Gibbons says.
It could take at least a week before all cash deliveries are back on schedule, says Joe Gavaghan, a spokesman for armored car company Garda. Luckily, he says, the company had time to prepare by filling up ATMs with cash before the hurricane arrived.