Good night, cash

Last year I had the opportunity to hear Henning Jensen, who was there at the very beginning, talk about the history of the Danish Dankort national debit scheme at and event held in Copenhagen to mark the publication of his book “Historien om Dankort”. If you are not familiar with it, all you need to know is that Dankort has been fantastically successful. It is used absolutely everywhere in Denmark and for absolutely everything. There is no reason to use in Denmark. Ever.

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I’ve been to Denmark a fair few times in the last few years (including an expedition to Roskilde) and I cannot remember the last time I ever even saw cash in the country, let alone used it.

Nocash danish train  1

To recap, then. There is no reason to use cash in Denmark and nobody does. However, for historical reasons presumably going back to the time of the North Sea Empire, Danish Law forces retailers to accept it. It looks as if this is about to change. In what many cash supporters would undoubtedly see as the thin end of an inevitable wedge, the law is about to allow shops an exemption.

Since the introduction of the Dankort in 1984, shops have been required to accept cash if the customer insists… Now a majority in Parliament… has agreed to propose legislation that would allow shops to decide for themselves whether they will accept cash payments between 10 pm and 6 am.  The aim, according to those behind the law change, is to protect stores against robberies and provide security for employees.

From Danish shops could soon start rejecting cash payments at night – The Post

I’d be surprised if anyone notices if cash goes to bed at night. I’ve never met a Dane without a Dankort. In fact, sometimes I wish I had one.

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What might the be the likely high-level impact of this move? Well, a final push to ditch Danegeld for Dankort will be good for everyone. Cash costs society far more than debit cards and we all end up paying for that because the cross-subsidy from efficient electronic payments to inefficient cash payments is substantial. People like me who put everything on cards are still paying for ATMs, security guards, bank robberies and rascals blowing up Bexhill railway station.

the total social cost of payments in Denmark is calculated at 0.55% of GDP, of which 0.35% is attributed to cash and 0.15% to the domestic PIN debit scheme.

From Why would some retailers want to get rid of cash? Because of the others who don’t | Consult Hyperion

I hope Denmark pushes ahead and shows us the way. It should be a matter of course that we don’t use cash at night in polite society (except for buying cocaine and such like).

Red lights for cash

Down at the PayExpo Middle East and North Africa (MENA) in Dubai this year, I saw an excellent presentation from Uber India. One of the most interesting things I learned was that because most Indian Uber rides are paid for in cash, the Modi government’s racial experiment in currency reform hit them hard. As cash vanished from circulation, so there was a downturn in business.

Uber India

That was bad news for the Uber drivers who need to drive to survive, but I’m still of the general opinion that the Indian push for a “less cash” (as opposed to cashless) economy makes sense, even for people who are poor, as many in India are. A couple of years ago, I wrote about the misguided view that cash is good for the less well-off. It is not.

People who live on the margin get screwed by cash.

From Cash hits the excluded | Consult Hyperion

This was a comment on a story about counterfeiting, and I concluded it by noting an interesting problem that I had not previously heard about, which was about sex workers being swindled through counterfeit cash:

In a country where counterfeits are widespread, it is obviously the marginalised groups trapped in the cash economy who are the big losers.

From Cash hits the excluded | Consult Hyperion

India’s experiment with demonetisation has accelerated the evolution of the retail payments environment not only for Uber but also for those marginalised people in the less-regulated parts of the Indian economy. As you will recall, with high-value banknotes, more than four-fifths the cash in circulation, vanishing many different  parts of the Indian economy have been affected and, clearly, groups dependent on cash will have been hit hardest.

From the time the notes of the denominations of Rs 500 and Rs 1000 ceased to be legal tenders, the number of customers visiting the red-light area have dwindled to negligible numbers.

From Commercial Sex Workers of Nagpur’s Ganga Jamuna Redlight area offer services for payments made through Paytms – Nagpur Today : Nagpur News

The response of at least one group of such marginalised people will have gladdened the heart of Mr. Modi and other advocates of cash-free commerce (e.g., me). They moved quickly to adopt new technology.

Commercial Sex Workers offering services at Nagpur’s Redlight area Ganga Jamuna have started offering [sex] in exchange of payments made through Paytm.

From Commercial Sex Workers of Nagpur’s Ganga Jamuna Redlight area offer services for payments made through Paytms – Nagpur Today : Nagpur News

Yes, mobile payments. There is no reason why mobile payments cannot step in to the breach and take over from cash and, as I constantly opine, deliver something better to the poor, since it is the poor whose money is lost and stolen, it is the poor who cannot pay remotely for better deals and it is the poor who cannot be paid efficiently.

[sex workers said] we have also adapted to the changing times and have adopted the newer mode of payments for the services. They opined that this will also prevent the customers from getting their cash looted by unscrupulous elements who dwell in this disrepute lanes (Badnaam Gali) of Ganga Jamuna area.

From Commercial Sex Workers of Nagpur’s Ganga Jamuna Redlight area offer services for payments made through Paytms – Nagpur Today : Nagpur News

Note that last sentence. Getting rid of cash will make people safer. So not only will these marginalised people no longer have to worry about counterfeiting or the value of foreign currency, but their money will be stored more safely. 

I was in Dubai to take part in a fun end-of-event discussion about the coming year for fintech, so I took the first three predictions from the Consult Hyperion “Live Five” for 2017 and shared these with the audience. Then I took the first three cakes, and shared them with me.

 Yes, you can have your cake and eat it

 I hope I’ll back asked back next year and called to account!

There you go bringing class into it again

Cash continues to dwindle in the UK, albeit slowly. No-one really needs it any more, except to pay people smugglers, although I suppose it might find a niche amongst hipster nostalgics sort of like vinyl records. I don’t need it to buy stuff in shops since I won’t go to a shop that doesn’t take cards. I don’t even need it to provide a stream of subs to student children, since the requests and the responses all go via PingIt now. Apparently I’m not the only one.

Continued growth is also predicted in the Faster Payments Service as more consumers move to online and mobile payments. These payments will more than double over the next 10 years, with 1.9 billion one-off and forward-dated payments forecast to be made in 2025.

From Debit cards to overtake cash in UK by 2021

When you can send money, instantly, from any bank account to any other bank account it’s hard to imagine what you might need cash or cheques for. We have the annoyance of having to give out sort codes and account numbers from time to time, but PingIt and PayM allow us to send money to mobile phone numbers and I imagine that an outcome of Payment UK’s deliberations on payee confirmation may well be the creation of a database of “paynames” (i.e., £dgwbirch) to make casual instant payments even easier.

On a typical day, I leave the house with no cash. I buy my bus ticket on my mobile, I use a card at the train station (they still don’t take contactless in the ticket machines) and I use contactless cards or (more usually) mobile to buy coffee and lunch and so on. I’m quite surprised that some shops still go through the pfaff of messing about with cash, especially when I nip in for some milk and the person in front of me is buying a couple of things and paying with a £20 note that means that I have to wait while they have change counted out for them. I don’t know why they bother. Actually, some of them don’t.

Healthy high street food chain Tossed has today opened what is thought to be the UK’s first completely cashless restaurant. Two new stores in Central London have been fitted with self-service kiosks, instead of manned tills, taking payment by credit or debit card, contactless, or Apple Pay instead of cash.

From Tossed opens the UK’s first entirely cashless restaurant

I’m surprised that supermarkets don’t already have cash-only lanes so that the rest of us can zip through. In fact, I would have thought that in some areas the cashless supermarket cannot be far away. I say in some areas, because I see cashlessness as a class issue. And I can prove it…

Waitrose is set to become the UK’s first major supermarket brand to operate a cashless store, where only card and mobile payments are accepted… Five self-service checkouts in the store will accept credit, debit and contactless card payments, as well as mCommerce tools that use near-field communication technology such as Apple Pay.

From Waitrose follows cashless store trend – Essential Retail

I should explain to our foreign readers that Waitrose is commonly understood to be the most middle-class of all shopping experiences. Yes, well, OK I know it’s only the Waitrose store on the Sky campus, but it’s a start. We are nation of debit card users. The middle classes rarely carry cash and use it only for paying tradespersons off the books.

 Apple Pay !!

The Apple Store still accepts cash.

The less well off remain trapped in a cash economy that loads costs on to them for no benefits. This is certainly an issue and it demands a national strategy for cash replacement, but as we don’t have one we will see continuing bifurcation as the poor are forced to bear the costs of cash while the rest of us dump it. This is not far-fetched techno-blinkered optimism, by the way. Cashlessness has a toehold and is beginning to spread.

Alex Wrethman, owner of the Charlotte’s Group restaurant business, decided to make his most recent opening, W5, an entirely cashless affair. “We are entirely cashless, it’s cards and Apple Pay only. There’s no going to the bank. There’s no cash on site which takes about two and a half hours a day to count. We reduced our insurance as we don’t have cash handling and the opportunity for theft is not there,” he says.

From Welcome to a cashless future where retailers recognise our faces | Guardian Small Business Network | The Guardian

Now I suppose this policy might deter the occasional oligarch or drug dealer but I shouldn’t imagine the general public much care, since anyone who can afford to go to the restaurant will have a  card, phone, bracelet, hat, badge or whatever.

Wrethman is passionate about cashless businesses and believes it is the way forward. He also says most customers “don’t care” as most use their cards or Apple Pay regularly anyway and prefer better prices as a result of cuts in administration.

From Welcome to a cashless future where retailers recognise our faces | Guardian Small Business Network | The Guardian

That last point is really telling. As has often been pointed out, as cash usage slowly dwindles, it doesn’t result in much of a saving for retailers. But when cash stops, the retailers can throw away their cash drawers and reconfigure the point of sale, reallocate staff away from dreary reconciliation and cancel the security guards. Reducing cash doesn’t mean big savings, but removing cash does, and without an actual national policy on this, the benefits will go to the middle classes at the expense of the poor. 


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