Denmark Legislates Cashless Society

In a groundbreaking move, the Danish government has initiated a proposal that will allow selected retailers such as restaurants, clothing stores and gas stations to refuse payments in cash.

Exceptions would be made for grocery stores, post offices, prescription drug purchases, as well as doctors and dentists who would still have to accept cash as a payment method. The pre-election proposal, which is very likely to be approved by the Danish Parliament, would allow shops to simply say no to cash as early as January 2016.

In a recent interview, the Danish Chamber of Commerce noted “it will be cheaper and easier for many companies, if in the future they can choose to receive payment via card or mobile.” In fact, according to the Danish government, cash purchases are both an administrative and a financial strain on retailers. Furthermore, a study by McKinsey, as reported by Quartz, explains that “electronic payments make banking systems more productive and lessen the need for an informal or shadow economy, which isn’t taxed nor monitored by the government.”

Danish customers have already moved away from metal and paper money. Almost a third of the population already uses a Danske Bank app called MobilePay which allows you to pay with a simple swipe on your smartphone's screen- similarly to the slowly but steadily growing Google Wallet in the U.S. In this context, Denmark’s Central Bank decided last year that it would no longer print banknotes and coins.

The Independent reports that the main fear of a nearly cashless society is fraud. In Sweden, for instance, where four out of five purchases are made electronically (either by debit or credit), cases of card fraud have doubled in the past 10 years. To alleviate possible fraud, Danske Bank has therefore linked individuals' MobilePay accounts to their national insurance numbers.

A similar effort to encourage a cashless society has already taken place in the U.K., which first introduced contactless payments in 2007. In September 2014, the spending limit of £10 (around $15) was raised to £30 (around $46) due to its growing popularity with the total worth of transactions tripling from £653 million (around $1 billion) in 2013 to £2.32 billion in 2014 (around $3.57 billion).

“We have seen over 41 million journeys made across London using contactless within just five months,” said Shashi Verma, Transport of London’s (TFL) Director of Customer Experience. “Contactless payments to travel can save our customers time, they don’t need to stop to top-up an Oyster card, or buy a ticket and can benefit from daily and Monday to Sunday capping.”

In the meantime, the cashless divide between Southern and Northern Europe continues to grow. In Southern Europe, cash still very much dominates “due to the low confidence in the authorities and the banking system,” according to Niklas Arvidsson, an associate professor of industrial dynamics. Salvation could come from the use of mobiles as payments. In 2014, U.K.-based RBR experts saw contactless technology as a stepping stone toward a mobile payments boom in certain nations in Europe, while in others – like Germany and Belgium – consumers were likely to bypass the contactless card altogether in favor of paying with their smartphones. So there is still a streak of hope for the cashless advocates to see the rest of Europe catching up with the U.K. and Scandinavian countries.



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