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Cash will not be eliminated any time soon, as it is cheapest

Although cash appears to be costly and has been around for a very long time, it has basic advantages that the new payment systems cannot match……….yet. All sorts of people are fighting to protect cash, including retailers.

Danish government proposals for cashless society resisted

The Danish government, as part of a pre-election package of economic measures, has proposed getting rid of the obligation for selected retailers to accept payment in cash, in e.g. clothing retailers, petrol stations and restaurants, moving the country closer to a cashless economy. One of the reasons is that already nearly a third of the Danish population uses MobilePay, transferring money to other phones and shops, and Sweden, Denmark and Finland lead the European Union in credit card payments per inhabitant.

Some commentators consider that the proposal is unlikely to meet much opposition in Denmark, where it is common to use debit or credit cards for the smallest of payments. And financial institutions consider that going cashless would save shops money on security and time on managing change from tills.

However, there are real concerns with this proposal:

  • there are fears that a complete move to electronic payment may increase the risk of fraud. In Sweden, for example, such cases have doubled in the past decade. Although Danske Bank, has taken steps to prevent fraud by linking MobilePay to NemID, a digital signature linked to the Danish equivalent of individuals’ National Insurance number
  • German central banker Carl-Ludwig Thiele last week cited economic data, freedom of choice and even Russian novelist Fyodor Dostoyevsky in a passionate defence of banknotes and coins, e.g.e choice of citizens about their payment instruments,” Mr Thiele, who oversees cash management and payment and settlement systems at the Bundesbank, said, “Government agencies do not have the right to tell citizens how they should pay.”

Cash usage the facts

Overall, the basic facts are that:

  • the anonymity and ubiquity is unmatched
  • cash is still used in most countries for at least 60-80% of all transactions and in the recession 2011-2014 share of trnsactions actually increased
  • the value share is much less and has fallen below 50% in some countries
  • cash is, according to the British Retail Consortium, the cheapest form of payment in stores, see.

Cash will only disappear from when individual retailers, e.g. airlines for in flight payments, decide to do so, not be government edict.

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Payments - Receipts at POS
Cash Payments at POS

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