Over recent years, cash in all Scandinavian countries has been on the path to slow demise. New technologies, including smartphone payment solutions gradually nibbled the market share for hard currency. And given the low crime-rates in Scandinavian countries, cash is quickly associated with misdemeanors, to say the least. There have been cases, in recent years, where people trying to make purchase in cash were reported to the police, with the suspicion of criminal activity.

Then banks started wondering what a world without cash would be like. After a mere glance at their profit sheets, they quickly realized that cash segments were nowhere near the most profitable. Cash is a pain to handle, distribute, manage, protect and store. ATMs require maintenance technicians (just as electronic payment systems!), and clerks need time and machines to count cash, all of which costs money. Of course, virtual money has costs of its own, but stand no comparison with hard cash. Comparatively, virtual money running on servers is more efficient, economically at least. So, they quickly started pushing for the outing of cash from their economy.

Only then did the States jump in. States are in charge of producing the actual notes and coins, which comes at an obvious cost. Because Sweden is not in the Euro zone, it has to design, produce and distribute its own currency. Given the technology contained in notes, that cannot be cheap. And once the currency has been distributed to the public, it gets torn, lost, stolen, forged and eventually laundered. All the more expense costs for the state. In addition, killing cash is supposed to reinforce State authority and ability to fight crime.

The first hamper on the move was social justice: this would have made life somewhat simpler and higher-tech for most, but left the most vulnerable out of the gig. Tech Insider noted, in its June 14 article : “The trend has its downsides. In addition to burdening people who don't keep up with new technology (like the elderly and some rural citizens), a cashless society is also more vulnerable to electronic fraud. In 2014, the number of fraud cases rose to 140,000 — more than double the amount from a decade ago, Sweden's Ministry of Justice reports. Critics of a cashless system fear even greater surges as payments move online.”. PRO (the national pensioners fund) added, “PRO welcomes digital development, but you cannot leave a group behind,” she said. “We do not accept that certain groups are excluded from the payment market. There are still situations in which there are no alternatives to cash.”

The question of civil liberties was quite central to the turn-around motion, although it was left much unaddressed. The Swedes are very attached to their democratic freedom, and realized that, without cash, they would be under complete control of the banks and the state. Strangely, though they do not favor cash in their daily use, hard currency revealed itself as something they want to keep, if only to keep the option for a rainy day. 

Two fundamental subjects rise, in such a debate: ability and time. It isn’t because some Swedes find cash less practical in their everyday operations that they don’t want the ability to use it. In recent years, payment methods multiplied adding old fashioned checks and wire transfers to Paypal and contact-free debit cards. Each time, liberty increased for the users. They no longer had to have a checkbook handy, or wait for opening hours at the bank, or have an active internet connection, their smartphones increased their ability to make payments whenever and wherever. And countries as democratic as Sweden like to see their liberties increased, not decreased.

At the bottom line, killing cash in one (very handy) option to make payments, and killing it amounts to limiting economic freedom. The second parameter is time: true, the current Swedish government is respectful of civil and fundamental liberties. But governments change, and new ones inherit the powers of the old ones. So if a country were to give exceptionally large powers to its government, such as total economic power and control, it may well be that the government in place will make proper and sensible use of this power. But what happens when the next government, a little less hell-bent on democratic liberties, comes into power? How can one be sure the same appropriate use will be made of these powers? In Sweden, as in many other European states, the threat of a far-right electoral victory looms almost every year. Citizens best not be short-sighted…

This may have flown way above the head of many, but a fundamental right has just been saved from oblivion in the kingdom of Sweden. Whether police agencies like it or not, whether governments like it or not, and whether even the people like it or not, liberties are measured in the number of things we may or may not do, of our own initiative, without answering to someone just after. And because economies are a major pillar of our societies, that includes buying things.  

Scandinavia is slowly becoming the first cashless region in the world. Denmark is even considering taking a step further by allowing retailers to completely ban cash from their stores.

In Sweden, banks are pushing the Government to take action to become the first fully cash-free country. At more than half of the country’s largest bank branches, including SEB, Swedbank, Nordea Bank among others, no cash is kept on hand, nor are cash deposit accepted. The banks are surely saving a significant amount on security, having eliminated physical cash to guard. However, customers now feel the impact of this major change.

In 2010, Swedish banks held around 8.7 billion krona in notes and coins, and today it’s around 3 billion. A Swedish bank consortium controls most of the cash machines in the country and they are now dismantling hundreds of them. Banks may be saving on this as well, but customers in rural areas now have to go further into the city in order to access basic services, and many customers are already stepping out to ask the Government not to give more power to the banks.

A cashless society may seem like a good idea on paper, however if it benefits the banks, which are more protected from physical robberies and thus allowed to cut costs, it doesn’t even so protect customers and banks from virtual fraud and security risks. The most recent figures from the ECB (1) show that fraudulent use of bank cards is racking up billions in costs for unlucky consumers. Total card fraud in Europe hit €1.3 billion ($1.4 billion) in 2012, a near 15 percent jump the year earlier. In other words, customers are increasingly at risk, as they might get hit directly with the consequences of digital fraud.

It’s therefore no wonder that banks are pushing for a cashless society, but it’s a very dangerous bet for all of us. Many other countries already refuse to transition towards a cashless society for several reasons.

For example, Germans place a high value on protecting their identities, privacy and data security. That’s the reason why most of them still refuse to transition to a cash-free society. Most Germans always carry some cash with them. The Deutschmark was a source of pride for their people, and today even if the Euro has replaced it, it has only increased Germans’ use of cash.

For historical reasons, many Germans and Europeans worry about the fact that their digital transactions could be monitored. Some tend to argue that cash-free transactions may be practical, but really they’re mostly favored by banks as a way of cutting costs while boosting profits.

Throughout Europe, most countries stand by the liberty of giving the customer the choice to use whatever means of payment they want. Yet, the Danish Government’s proposals go against this right, giving gas stations, clothing stores and restaurants the option to stop taking cash payment. For many, this would slow down the economy instead of boosting it.

According to the former finance minister, Bjarne Corydon, the fact that Danish companies are still required to accept cash payments “involves considerable administrative and financial burdens.” Yet, the proposal of a cashless country didn’t come from a consumers’ group, nor a business owners’ association, but from the banks themselves. It is merely hard to envision this change as positive for the average customer and business owner.

Danish Chamber of Commerce chief executive Jens Karskov publicly declared that “Cashless environments will make it possible to test new innovative store concepts and payment without having to incorporate the very cost-intensive measures are required when handling cash” (2).

But customers already expressed their concerns and vowed to make the government change its view on the issue, fearing that older age groups would change their consumption habits because they are so used to using cash.

“The plan to eliminate cash payments from retailers and restaurants will no doubt raise concerns over possible restrictions of consumer access to necessary goods such as food and gas, as well as to risks of increased electronic fraud, but Denmark and other Nordic countries have already signaled they intend to lead the shift toward cashless economies, even if they have to push consumers along with them,” wrote Shelly Banjo, journalist in Quartz (3).

There are many reasons why customers are angry at this reform (4) that seems to have been planned without them even knowing about it. Most of them are still attached to banknotes and coins for what it means, historically, it has always been a source of pride and national unity. When holding cash you hold part of your country’s history, and it goes the same when traveling abroad. Look at how e-books were supposed to completely overtake printed versions… It never happened and most likely won’t because even if the book is the same, the feeling isn’t and customers, beyond being used to it, prefer it over electronic.

Not leaving customers the freedom to choose their form of payment represents a great threat to democracy in many countries. The near future will reveal whether Denmark and other Scandinavian countries truly feel that threat and whether they will reconsider supporting an utopian cashless future.
 

1. European Central Bank
2. Denmark hopes to boost its economy by eliminating cash, Shelly Banjo, Quartz, May 6th 2015
3. This country is trying to go cash-free, CNBC, Kalyeena Makortoff, May 15th 2015
4. The empty promises of a cashless society, Dominic Reed, Broowaha, March 28th 2016