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Harbinger of an Increasingly Cashless Future: Danish Shops to Not Accept Cash

12 May 2015  |  4076 views  |  8

 

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 you think.

 

 

Harbinger of Increasing Cashless Future Quisk blog TagsPaymentsInnovation

Comments: (9)

Stanley Epstein
Stanley Epstein - Citadel Advantage Ltd - Modiin | 14 May, 2015, 15:16

We already live in a (mostly) cashless world. If you, like me, live and work in a developed country you are by all accounts already living in as cashless world and without noticing it, have been for quite a number of years now.  My own cash usage has dwindled to drawing a small amount from my local ATM (monthly now, though it used to bi-weekly a couple of years ago) just to cover those odd occasions when a card or other cashless instrument is either not acceptable or (heaven forbid) won’t work. Whether you can legislate cash away – well that is another story.  

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John Candido
John Candido - Black Cabs - Melbourne | 15 May, 2015, 09:22

It is not a matter of 'legislating cash away'. If the Danish Chamber of Commerce is asking the Danish government to do this on behalf of the many businesses it represents and even then, as a voluntary exercise in favour of non-cash alternatives, how is that compulsory? It is more a case of gradual evolution away from cash to its alternatives such as credit cards, debit cards, the internet, computers and smartphones.

It is what the majority of business people and the vast majority of members of the public in Denmark and in places like Sweden have got used to over time and has in effect, voted with their feet because it is a cheaper way to run a business. You cannot stop technology or its pervasive effects on all of us, especially when the gradual change to a cashless society has so many inbuilt economic and crime-preventing benefits, as well as convenience and making purchasing a better experience for consumers. 

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A Finextra member
A Finextra member | 15 May, 2015, 21:29

John,

Having lived in Silicon Valley in the U.S. for over 20 years now, I definitely agree with your points about technology's pervasive impact on our lives.  Yes--the politicians in Denmark would likely not support this proposal if the majority of Danish merchants and/or citizens would not support.  Our industry's collective challenge is to get more countries to evolve to reach this state.  Still a LONG way to go...

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John Candido
John Candido - Black Cabs - Melbourne | 16 May, 2015, 12:14

Dan,

Will Quisk ever come to other countries outside of the United States? I would like to have a look at it with a view to possibly using it but I live in Australia.

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Gregg Weintraub
Gregg Weintraub - State Street IMS - Princeton | 18 May, 2015, 15:39

There is a regulatory push to actually eliminate cash - governments appear to have an incentive to go cashless.  See this article from Bloomberg Businessweek: http://www.bloomberg.com/news/articles/2015-04-23/negative-interest-rates-may-spark-existential-crisis-for-cash

 

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John Candido
John Candido - Black Cabs - Melbourne | 18 May, 2015, 18:05

It is simply unacceptable that any bank can charge people negative interest rates while banks will use their money to lend to other parties via mortgages and commercial loans in order to generate profit. It seems that the banks have come to feel that they are omnipotent and that they may as well push the envelope in whatever way they can to make ever more obscene profits. The ordinary person in the street will not tolerate any interest rate below zero for their hard earned money. Even if zero interest rates are legal, they will not happen in an economy that has genuine competition between banks that are not behaving like a cartel or a monopoly.

Should the banks insist that this is the new normal, we are looking at mass demonstrations followed by national laws making negative interest rates illegal. This story seems to have been concocted by desperate people who have seen the potential threat to cash by technological advances in payments, and have decided to launch a fear campaign. A last gasp effort is underway to keep cash as a permanent part of our economy. The closer that we get to a cashless society the greater the chance that we will see desperate lunatics of the far right come out of the woodwork, in order to put fear into the idea of removing cash from our lives. 

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Gregg Weintraub
Gregg Weintraub - State Street IMS - Princeton | 18 May, 2015, 18:31

John,

Read the article carefully - for you and I the option to withdraw our cash and stuff it in mattresses prevents banks from breaking zero. But for large institutions and banks lending among themselves, this is where there seems to be the outbreak of negative rates.  From the article, "The European Central Bank, struggling to ignite growth, has a deposit rate of –0.2 percent. The Swiss National Bank, which worries that a rise of the Swiss franc will hurt trade, has a deposit rate of –0.75 percent. On April 21 the cost for banks to borrow from each other in euros (the euro interbank offered rate, or Euribor) tipped negative for the first time."  The debate on this site has been when will cash die for a long time.  It seems to me that the governments pushing cash to be eliminated is the first real threat that it may come true.  Then will we have the power to avoid negative rates???

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John Candido
John Candido - Black Cabs - Melbourne | 19 May, 2015, 06:50

I have read the every word of the article by Peter Coy entitled, 'The Death of Cash', on your link to Bloomberg Business very carefully. It is a thought bubble masquerading as a fear campaign about the eventual end of cash, and a story about the banking system putting their toes in the water to determine if they can make money with depositor's accounts by charging each other and other businesses first. This article can be categorised as bankrupt puffery. 

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John Candido
John Candido - Black Cabs - Melbourne | 19 May, 2015, 07:17

Prominent German economist Professor Peter Bofinger has stated that he supports Germany and the rest of the EU to become cashless for a variety of reasons. I take it that he has thought about this issue before making his public statement.

http://ineteconomics.org/people/peter-bofinger 

http://en.wikipedia.org/wiki/Peter_Bofinger  

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