One day people may reflect: do you remember back to when cash was accepted here? This day may not be as far off as you think; recently shops in Denmark were given the right to
not accept cash. This blog describes the Danish announcement—as well as others around the world—and discusses whether it is a harbinger of an increasingly cashless future.
What was announced in Denmark
As part of a pre-election package of economic measures put forward by the Danish government, from the beginning
of next year selected retailers, including restaurants, clothing stores and gas stations, would no longer have to abide by a rule forcing them to accept cash.
Grocery stores, post offices, places selling prescription drugs, doctors and dentists, would still have to accept physical money under the plan. The Danish government says that accepting cash puts a considerable financial burden on retailers. At the same
time, Danish citizens are turning to electronic payment options. About 25% of Danes use
Mobile Pay, a smart phone application for transferring money to other phones and shops.
This announcement has created a stir in Europe as German Central Banker, Carl-Ludwig Thiele, cited economic data, freedom of choice and even a Russian novelist quote in a passionate defense of bank notes and cash. The Dostoyevsky quote was from 1861: “Money
is coined liberty.”
The coming weeks will certainly bring more viewpoints on Denmark’s move toward a more cashless society.
What about other countries
In 2010, airlines in the U.S. began not accepting cash on flights as payment for drinks, snacks, etc. The L.A. Times describes this change in
“Why doesn’t cash fly on airlines?” As is often the case in America, a law suit followed and in 2013, the
U.S. courts in New Jersey supported the ability for merchants to make this decision.
There is no U.S. federal law requiring that businesses accept currency or coins as payment for goods or services:
“Private businesses are free to develop their own policies on whether or not to accept cash unless there is a state law which says otherwise.”
In 2014, London buses stopped accepting cash, and in
Sweden—hailed as the most cash-free country on the planet—public transit stopped accepting cash many years ago… as handling cash had
become a “work environment problem.” Now four out of five transactions in Sweden are handled electronically.
Harbinger of an increasingly cashless future
Certainly, cash will still be used for a LONG time to come. Even in Sweden, the country leading the way toward a cashless society, time and money was invested—surprisingly—to
create new versions of their currency to be launched later this year. Yes, there is still national pride and other psychological factors associated
with using physical currencies.
That said, we believe over time more and more merchants will decide the costs of accepting cash are not worth the benefit. Governments will—appropriately—get involved to ensure these new digital cash solutions are regulated and that fairness exists across
all of its citizens.
Today’s software and mobile technologies enable the digitization of a country’s currency. This change can provide significant benefits for consumers, merchants, banks and governments. Digitized cash is more cost-effective than older card-based payment
solutions, and this will help meet a country’s financial inclusion goals.
Along with the Gates Foundation and other thought leaders, we believe digitized cash is a good thing for people around the world. And it may be sooner than you think when more people will reflect back on “when they used to accept cash.” Let us know what