The countries where cash is on the verge of extinction
The countries where cash is on the verge of extinction
Is going cash-free really ‘cleaner’ or ‘safer’?
By Lauren Comiteau 29 September 2016
My dad, a former Wall Street trader always advised me
“cash is king” and to “hold on to it” when the economy gets tough.
But in the Netherlands, cash is definitely not getting
the royal treatment. In so many places, it has simply ceased to be recognised
as legal tender. More and more Dutch stores, from upscale health-food store
Marqt to my local baker and bagel shop, take pin — or debit — cards
exclusively. Some retailers even describe going cash-free as “cleaner” or
“safer”.
Tucking my debit card firmly away, I decide to see how
far a bundle of cash will get me. Not far. The big-ticket items are strictly
cashless affairs: my rent and my telephone bill among them.
I meet with baffled expressions and some resistance. “I
can’t remember the last time we received a cash payment,” says Marielle
Groentjes, an administrator with the company that manages my apartment, Hoen
Property Management BV, and has worked there for a decade. “We don’t like cash
in the office, we don’t have a safe, and banks charge you for depositing it.”
I can’t even use my euros to pay for parking in much of
the city
But it’s the smaller items that are giving me the biggest
headaches. Not only can I not buy my organic produce at Marqt, but I am forced
to wait in long cash-only lines at the supermarket while I watch those with
debit cards quickly pay up and make it home for dinner. When I try to buy a
tuna sandwich at Dutch bakery chain Vlaams Broodhuys, my cash is rejected. I
can’t even use my euros to pay for parking in much of the city.
“Cash is a dinosaur, but it will stay,” says Michiel van
Doeveren, a senior policy advisor at the Dutch central bank, DNB (De
Nederlandsche Bank). But he points out it's the logistics that make handling
cash expensive (it must be transported, guarded, tallied and registered) versus
the ease of electronic payments. “It’s important that the electronic economy
increases. We want to foster more efficient payments.”
Even homeless magazine vendors accept card and mobile
payments these days
Electronic payments in the Netherlands’ shops and
supermarkets overtook cash payments for the first time in 2015 by a narrow
margin: 50% debit cards while 49.5% were paid for in cash the remaining 0.5%
were credit card-payments. There’s a movement afoot by a coalition of Dutch
banks and retailers that want that ratio to increase to 60% electronic payment
versus 40% hard currency by 2018. They say cashless payments are cheaper, safer
and more convenient.
Like the Netherlands and its Scandinavian neighbours,
Sweden is among the front-runners in the race to eradicate cash. But not
everyone is welcoming.
For small businesses, it costs so much money to put cash
in the bank
“It’s a very big problem. For small businesses, it costs
so much money to put cash in the bank,” says Guido Carinci, chairman of small
business association, TOMER. Carinci, describes the situation as “awful,”
saying he has to pay a fee of 300 Swedish kronas (about $35) every month to a
company that is then able to deposit cash into his bank account.
It all comes down to profit margins. Swedish banks, he
says, profit handsomely from charging transaction fees to retailers for card
payments, amounting to millions of kronas annually for the banks, whereas there
is no revenue generated on cash. This leaves banks little incentive to accept
currency.
Citing the high costs of handling cash and security
concerns, many Swedish stores have already abandoned their cash tills,
including telecommunications giant Telia Company, whose 86 shops nationwide
stopped accepting cash in 2013. The country’s buses haven’t accepted currency
from passengers for years, and even homeless magazine vendors accept card and
mobile payments these days.
The problem has become so bad that many of Sweden’s
residents, facing the dilemma of what to do with piles of cash that banks don’t
want, are even resorting to “hiding it in the microwave,” according to Björn Eriksson, head of security industry
alliance Säkerhetsbranschen.
Attitudes, however, vary significantly within Europe and
globally. Some cultures are still deeply reluctant to give cash up, including
Germany, whose consumers believe, according to a recent study by the country’s
central bank, that using cash gives them better control over their spending. In
Europe’s economic superpower, more than 75% of payments are still made in cash.
In Italy, where the cash culture runs deep, that number jumps to 83%.
And as much as Americans still love dollar bills — the
nation only adopted chip-enabled credit cards last year, a full decade after
many European countries — a move toward cashless is beginning to take root
across the Atlantic too. In January, several branches of the 48-strong
restaurant chain Sweetgreen stopped accepting cash, including at its Wall
Street location.
“I was surprised,” says New Yorker Persephone Zill. “I
think it is because they see that all the young folks on Wall Street are using
their smart phones, such as Apple Pay, to buy things. I know my daughter uses
the Venmo app for everything. It frankly made me feel old and outdated.”
Advances in mobile technology have seen banks leapfrog
cash payments in some countries in Africa. In Kenya and in Tanzania, for
instance, the cashless mobile-banking-system M-Pesa means millions of people
now pay bills, collect salaries, buy livestock and even conduct small
transactions at local markets via accounts on their mobile phones.
Being stamped out
Personally, I hate that the cost of cash is increasingly
being passed back to people like me.
Still, I head to my local branch to collect some coin
wrappers.
At my own bank, I’m charged six euros ($5.38) per deposit
after the first six transactions per year. As my daughter cracks open her piggy
bank and painstakingly counts out five euros in coins I realise the cost of
depositing her small sum of funds into in her bank account will wipe out her
savings.
“Excuse me?” asks the doe-eyed assistant. I try to
explain these are little paper tubes you fill with different denominations of
coins that I used as a child.
It still doesn’t register. At my prompting, she tells me
she’s 25 years old, leading me to conclude the problem of cash may just sort
itself out over the coming decades as a new generation takes charge.
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