Denmark, Norway, and Sweden to Become Cashless Countries

Posted on Jun 10 2015 - 7:38pm by Devesh
Cashless Trnsactions

Cashless Transactions

Denmark, for most of our readers who don’t know, is a country comprising of the Jutland peninsula and its offshore islands, which links Northern Europe and Scandinavia through the Öresund bridge. 

The Danish government has proposed to do something that is totally absurd yet innovative at the same time.  What the government is proposing is that stores in the country should just do away with their cash registers or cash boxes altogether from next year, i.e., January 2016.

For most of us in India, the thought of not having to touch paper money is somewhat awkward.  At the most, only the higher upper class and a light class have actually embraced this, but are still using debit or credit cards at most places.  Only in the event that they are not able to use these plastic cards, are they using cash and that too on rare occasions.

If the Danish government’s proposal gets passed in the Parliament, they will become the first country in the world to get rid of notes and coins.

If you dissect and inspect what the Danish government’s proposal actually is, you will begin to understand their thinking and appreciate the steps the government is taking in this regard.  Most of their current thinking lies in the fact that paper money and/or coins presents thieves with motive to steal and there is less security involved.

There is also the issue of printing notes and/or coins, transporting them from one place to another set of banks or ATMs, your notes have to be handled carefully to some extent lest they get spoilt or degrade, less security to trace out the money, and these always love to steal cash because of its liquidity.

Michael Busk-Jepsen, executive director of the Danish Bankers Association said, “A cashless society is no longer an illusion but a vision that can be fulfilled within a reasonable time frame.”

Though this is an ambitious plan, there are many critical services like hospitals, pharmacies, post offices that would still have to accept cash under this new proposed plan, which may become law this year. Other than Denmark, Sweden and Norway, are also in the race to becoming global economies looking towards electronic money as a trend.

At present retailers in Denmark have to accept cash, but this obstacle hasn’t stopped people in Denmark to embrace or accept their digital counterparts. 40% of people in Denmark use Danske Bank’s MobilePay, allowing purchasing in stores and/or with online retailers, and money to be transferred between people.  People in Sweden and Norway have similar experiences.

If you look at the percentage of cash payments made by people in the US and Scandinavia, it accounts for 47% and 6% respectively.  One of the biggest things technology has enabled in the Scandinavian countries is that you can buy a newspaper sold by a homeless person with a debit or credit card (in Sweden).

There is a trend marching towards digital money at an accelerated rate in Europe.  This is supported by the fact that in 2013 non-cash payments had risen by 6%.  Even in the UK, cashless payments had overtaken payments made with notes and coins this past year.

The Bill and Melinda Gates Foundation and the United Nations wants to cut costs and improve transparency.  Both these organizations are working with the private sector and governments for the quick adoption of electronic payments.

Only time will tell if we are ready for cashless and/or digital transactions.  There is still the inherent risk of fraud and security hacks/cracks.  For the current and future generations this might be the best option, but the elderly and marginalized groups that don’t have access to electronic payment systems, it will be a big setback for them.

We are still seeing fraudulent card transactions for many unlucky people who have fallen victims to these types of frauds.

What do you think about this?  Do you think that India should also take steps towards this?  Would you want to go cashless with all of your purchases, even at your local grocery store or the corner store?

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