At a time when the dominant narrative around cash is that its demise is all but inevitable, as well as broadly desirable, the 2024 payment report by Sweden’s Riksbank may offer a cautionary tale.
In October last year, in More Good News for Cash in Europe, More Bad News for Digital Dollar in US, we reported that recent developments suggest that the trend away from cash and toward purely digital-only payment systems may not be quite as smooth or as seamless as some may have wished or expected. One of the developments we highlighted in that report was growing concern among central bankers and politicians in Sweden, one of Europe’s most cashless economies, about the unintended consequences of driving cash out of the economy:
Even by late 2020, Sweden had less cash in circulation than just about anywhere else in the world, at around 1% of gross domestic product, according to the latest available data. That compares with 8% in the U.S. and more than 10% in the euro area. As a recent piece in Interesting Engineering notes, Sweden is already “officially cashless”:
Cash is never needed, not even for small purchases like hot chocolate at a Christmas market in Stockholm. All vendors have a mobile payment chip-and-PIN card reader like the one offered by Stockholm-based mobile payments company iZettle, or they accept payments through the mobile application Swish. Swishing is perhaps the easiest way of payment for everyone.
The Risks of Going Fully Cashless
But now the country is beginning to realise that an almost exclusively digital payments system comes with significant risks, especially at a time of heightened geopolitical tensions. In time-honoured fashion, the article in the UK Telegraph began with a spot of fearmongering about Vladimir Putin.
“People started to realise that it is very easy for Vladimir Putin to switch everything off,” Björn Eriksson, a retired police chief, former head of Interpol and leading cash advocate, told the Telegraph. “At first we were arguing for vulnerable people, the elderly, women in abusive relationships who rely on cash… Now we are talking about national security. And it’s not only Putin, it could also be organised crime.”
In 2021, the Riksbank, Sweden’s central bank (and the world’s oldest), introduced a new directive obliging the country’s six largest credit institutions to continue providing their customers with certain basic cash services.
But while that may have meant that people in Sweden can continue to access cash from their local branch, it is becoming increasingly difficult to use it as fewer and fewer retail businesses accept notes and coins.
This is partly due to the greater convenience of handling digital payments while the card processing fees are substantially lower than the US. But it is also because most Swedes, including many pensioners, prefer to use cards or mobile payments. As a baker in Stockholm told the Telegraph, “the only people who bring cash to the shop are tourists. I feel bad for them because they just take the krona home, where it is useless.”
But even that trend may be reversing. According to Eriksson, a growing number of young people are joining the pro-cash movement — and mainly over privacy concerns.
Rediscovering the Benefits of Cash
Earlier this week, Heise Online, a German online news service that covers IT, telecommunications, and technology sectors, published a long, in-depth report about the Riksbank’s apparent rediscovery of some of the benefits of cash. The article also explores some of the Riksbank’s concerns about the potential fragility of a fully cashless payment system, as outlined in its 2024 Payments Report, published in March.
At a time when the dominant narrative around cash — as espoused by senior bankers, central bankers, big tech and fintech executives, politicians and economists, and of course, their ever-faithful servants in the media — is that its demise is all but inevitable, even in countries where cash is still King (Germany, Spain, Austria, Mexico, Thailand, Japan…), the Riksbank’s report may offer a cautionary tale. From the Heise Online piece (machine translated):
“The Swedish payments market has been digitized rapidly,” states the Riksbank. Cash and manual payment services have been replaced by cards, mobile phones and internet services. “As a result, payments have become faster, smoother and cheaper overall,” which the institute points out is “a positive development.” However, there are groups in society “who do not have access to digital payment services or find it difficult to use them and are therefore marginalized”. There are also “serious fraud problems that could undermine trust in the payment system.”
Digitalization also makes payments “more vulnerable to cyber attacks and disruptions to the power grid and data communication,” the bank points out. At the same time, the geopolitical developments of the past few years required “Sweden to have strong civil defense.” The developments suggested “that we should concentrate more than before on the challenges of digitalization.”
Put another way, cash does not crash. It does not fail in a power cut or seize up during a cyber attack (though, of course, ATMs might). By contrast, digital payment systems need a stable and continuous internet connection to process transactions. When these connections fail, the result is often chaos. Digital payment outages have caused significant disruption in a host of countries in recent years, including the US, the UK, Australia, Indonesia, Germany, Canada, Spain and Norway. Generally speaking, the more cashless the country, the greater the disruption.
Sweden’s Cashless Journey
Sweden is one of the world’s most cashless economies. In large part, its abandonment of cash was the result of technological and generational shifts. As payment technologies began to change in the first two decades of this century, most Swedish citizens began to prefer the speed, ease and convenience of digital payments.
They were also nudged heavily in that direction by commercial banks, which by 2016 had made 60% of their branches cashless, as a 2019 Riksbank working paper documents. This made it much more difficult for citizens to access cash and for businesses to deposit it, which in turn accelerated the uptake of digital payments and the abandonment.
Sweden’s legal tender laws also made it possible for the Riksbank to withdraw many of Sweden’s large denomination notes in circulation. For instance, the value of 1,000-krona notes (worth just over $90) in circulation declined gradually from SEK 48.4 billion in 2001 to SEK 21.4 billion in December 2012. Beginning in 2013, this decline accelerated, plunging to SEK 9.7 billion by December 2013.
After playing a part in the wholesale removal of cash from Sweden’s economy, the Riksbank is now trying to reverse some of the damage it has caused. It is not the only Scandinavian central bank to have flagged up the fragility risks of exclusively digital payment systems. In 2022, the Bank of Finland recommended that the use of cash payments be guaranteed by law. Like all Nordic countries, Finland is a largely cash-free economy. But like Sweden, it has begun to see the risks of going too far, too soon.
In March 2022, the central bank initiated a proposal for legislation to ensure a minimal level of cash-paid services. In October of that year, the Head of the Payment Systems Department and Chief Cashier at the Bank of Finland, Päivi Heikkinen, even advised households to make sure they have some cash on hand, just in case the country’s payments system were to go down. At the time, Finland had just applied to become a NATO member and the government was fretting about the risk of cyber attacks from Russia. In an interview with the national broadcaster, Heikkinen said her intention was not to ”fabricate catastrophic scenarios” — before saying that in the worst case scenario, the payments system could go down for a period of weeks.
In Sweden, the Riksbank is already taking countermeasures to try to guarantee a steady supply of cash, the Heise Online article notes:
It is improving the cash supply by setting up new offices where companies can collect and deposit cash. Having such cash depots in more locations across the country would reduce both the costs for businesses and the risk that cash would no longer be usable in the event of a disruption.
This is the only way to ensure “that everyone can pay”. In general, “stronger legal protection for cash” is necessary. Banks should be required to “accept cash deposits, including coins, from individuals.”
The Riksbank supports its demands with reference to an annual representative survey on the payment habits of Swedes. According to this, “cash is being used more frequently than before”. Almost half of respondents reported using cash in the past month, an increase of 15 percentage points compared to 2022.
This pro-active approach to bolstering the cash system contrasts sharply with what some central banks and governments are saying and doing in other Western or Western-adjacent countries. As we reported in August, Brazil’s Chamber of Deputies is mulling a number of legislative proposals calling for an end to the printing, minting and circulation of physical notes and coins. As the World Economic Forum trumpeted in 2022, Brazilians are adopting digital payments faster than anyone else.
In Australia, the government refuses to legally protect the use of cash in retail settings. The Governor of the Reserve Bank of Australia, Michele Bullock, has even warned that as the running costs of processing cash for banks and businesses mount as a result of the declining share of consumer payments made using cash, it may become necessary to begin charging people for using cash in retail settings.
Granted, Australia is significantly larger and more sparsely populated than Sweden, making it much harder and more costly to transport money securely to all parts of the country, including remote parts of Queensland, Northern Territory and Western Australia. But whereas the Riksbank is talking about taking on a proactive role, together with other authorities and banks, to ensure that cash can be transported to and from retail outlets at reasonable prices, the RBA is talking about making consumers pay for the privilege of using cash. Meanwhile, Armaguard, Australia’s largest currency transport business, servicing around 90% of the cash-in-transit market, is warning of bankruptcy — unless the banks agree to pay more for its services.
Predictably, Bullock’s suggestion that citizens may one day have to fork over extra fees for the privilege of paying with cash — to protect the banks and retailers from the exorbitant costs of maintaining cash infrastructure — did not go down well with many Australians. While most citizens are using digital payments for most, if not all, of their purchases, millions still depend on cash in their daily lives.
What’s more, the very same Big Four banks Bullock wants to protect from having to part with extra money to fortify Australia’s cash network have posted record or near-record profits in recent times, in part because of surging interest rates but also because of the rising fees they charge on card payments. Those same banks received huge sums of cheap debt to tide them over during the COVID-19 pandemic while at the same time closing hundreds of branches and ATMs across the country.
In Sweden, as Heisse Online notes, more and more Swedes see the decline in cash consumption as a negative development — 44 percent in 2023 compared to 36 percent in the previous year:
The proportion of respondents who believe that they cannot get by without cash in today’s society has also increased compared to 2022. This could also be “an effect of increased crisis awareness due to the war in Ukraine,” the bankers speculate.
The need to pay in cash in certain situations such as at clubs, in corner shops and at flea markets is also mentioned, the report goes on to say. Some also emphasized that using cash made it easier for them to keep track of their finances. Older people generally find it much more difficult to get by without cash than younger people. In the 2023 survey, half of respondents said they wanted to pay cash but the store did not accept it. In 2022 the corresponding value was only 37 percent…
These numbers suggest that cash may be experiencing a mini-renaissance in Sweden, which would echo similar trends seen in other heavily cashless economies. For example, a recent survey down under by fintech company Waave revealed that as many as 71% of Australians are worried about the economy becoming completely cashless. Those most concerned include Baby Boomers (82%), regional Australians (77%), and lower income households earning less than $100k (75%) — a reminder of the oft-ignored class-war element of the War on Cash.
It’s not hard to see why concerns about the future of cash are on the rise down under. In recent months, three of Australia’s Big Four banks have removed over-the-counter cash withdrawals from some of their branches while increasing numbers of businesses, both large and small, are choosing to reject cash payments altogether. In Australia, it is perfectly legal for businesses to refuse to accept cash as long as they inform consumers of their stance before any “contract” for the supply of goods or services is entered into.
Aussie cash lovers recently expressed their displeasure with these trends through a “Draw Out Some Cash Day” on April 2. According to news.com.au, hoards of people were seen lining up to withdraw cash:
The movement, led by the Cash is King Facebook group, aimed to show banks and retailers there is still a demand for cash amid warnings the country will be “functionally cashless” by 2025.
Social media posts show “massive queues” of people, both young and old, lining up at various banks around the country, with one woman sharing she waited for up to an hour to get her hands on bank notes.
“All banks I passed today had queues out the door,” one person wrote on Facebook alongside a picture of people lining up outside a Commonwealth Bank branch.
Governments in other countries, including Ireland, Spain, Slovakia and Austria, are taking pro-active steps to protect the use of cash. Even the European Central Bank has called for a regulatory crackdown on all businesses and public bodies in the Euro Area that refuse to accept cash. At the same time, the ECB is proceeding in its digital euro project from the “investigation phase” to the “preparation phase.”
As I noted at the time, cash is still the most frequently used payment method in the Euro Area, though it is losing ground to cards. Even if, or when, the digital euro is launched, it will presumably coexist with cash for some time, at least until the digital euro gains a strong enough foothold. ECB President Lagarde has said that “cash is here to stay,” adding that European citizens “will have both options: cash and digital cash.” How long it stays that way will remain to be seen. My guess is that if the digital euro does gain a strong foothold, the ECB will begin financially incentivising its use while decentivising the use of cash.
In the UK, meanwhile, cash may even be staging a comeback of sorts after ten consecutive years of falling use. According to both UK Finance, the country’s largest bank association, and the British Retail Consortium Group, the most influential retail lobbying group, cash use increased in 2022, for the first time in a decade. Whether this rebound represents a genuine trend reversal or merely a dead cat bounce (apologies, as always, to feline lovers) remains to be seen. But the mere fact that cash use is growing at all despite concerted efforts by the government, banks and retailers to reduce its use is noteworthy.
So, too, is the fact that Sweden’s Riksbank is expressing reservations about the resilience of a fully cashless society. After all, the Riksbank was one of the first central banks in Europe to begin aggressively undermining the role of cash in the economy. That said, its U-turn on cash it is not as novel a development as is suggested by the Heise Online article. The Riksbank, the article claims in its introduction, “is suddenly emphasising the indispensable role of cash in secure, widely available payment systems. This is a change in strategy.”
That is somewhat misleading. As the German financial journalist Norbert Häring notes (in German) on his blog, while there has definitely been a sea change in strategy at the Riksbank, that change did not begin just now but rather eight years ago, “after the central bank, together with Sweden’s commercial banks, had done everything they could to undermine the use of cash.” Since early 2016 Sweden’s central bank has slowed the march towards a cashless society, as Häring reported at the time.
Now, the Riksbank is not just questioning the wisdom of moving to a fully cashless economy at this current moment in time; it is explicitly warning about the potential risks such a move might entail. At the same time, it is working on developing a CBDC — the so-called e-krona, now in its fourth and final pilot phase, looking at “how an e-Krona can be used offline for payments if electricity and telecommunications are not working.” Which begs the question: once the e-krona is ready to launch, which will presumably be sooner than most other CBDCs in the West, how will it co-exist with cash? That will have to be the subject of a future article, though readers’ suggestions are more than welcome in the meantime.
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Coins have been abolished for one reason: they are too expensive when fictional reserve inflation has been universally adopted.
Paper/plastic promissory tokens are guaranteed by the government but are intrinsically worthless.
Copper coin, silver coin, etc are all able to be used and are inherently worth more than face value in a world dedicated to stealing from savers and enriching those who are close to the lenders.
Shame on everyone who supports digital money over coin!
“Some also emphasized that using cash made it easier for them to keep track of their finances. Older people generally find it much more difficult to get by without cash than younger people.”
As someone who pays in cash for the majority of purchases, I always wonder how these people who don’t use cash keep track of it all. Do younger people find they they unexpectedly overdraw their account and find themselves in debt because they don’t use cash? As someone who worked in a bank back in the day, I can guarantee you banks would consider more frequent overdrafts a feature and not a bug.
Indeed. A apparently popular piece of voyeuristic TV here in Norway is about “helping” people manage their consumer debt. Invariably it involves someone that waves a card at every purchase.
My wife, God bless her, has inculcated a culture of “Go to the ATM, withdraw what you need for a purchase, plus a bit extra for the rainy day and do it before you buy” into the entire family. All of us think twice when we can physically see the cash leaving our respective stashes.
A great method to save money….
>People started to realise that it is very easy for Vladimir Putin to switch everything off,” Björn Eriksson, a retired police chief, former head of Interpol and leading cash advocate, told the Telegraph.
Putin, there it is, the bogeyman, the source of all things evil. (other than Trump..),
As far a I’m concerned, at least here in the good old USA, Mother Nature herself can do an adequate job of wrecking the electric infrastructure, wit need all the storms, floods, tornadoes throughout history that has left us in the dark for days if not weeks. Forget about hackers and the like.
And setting that aside, there have been numerous times over the years go into the local store only to see a sign over the credit card reader saying”Sorry, the network is temporarily down.” From what and all I get is a shrug.
I don’t think cash is going away anytime soon.
And besides, why eliminate a great way to buy off your politicians? I mean, C’mon man…
Sweden is deeply ironic. I lived there for 6 months in 2015. Tramps (sorry, street people) only reluctantly accepted cash. Every single one in the (not Stockholm but fairly big) city that I lived in had a card reader. EVERY ONE.
You caused major disruption if you tried using cash on a bus instead of bank card. I found it dystopian even then.
I thought everything was a “me problem” until a colleague, picking up on my discomfort, took me out for coffee & cake and said she was from Stockholm but 20 years of residency still didn’t make her accepted.
In the book “The New China Playbook” the author says that panhandlers use a smart phone and display a QR Code for people to provide payments to them. Now, that’s high tech!!
2017 in Malmo. I ate in a restaurant and asked the waiter if he takes cash. ” Of course”, he replied.
That’s good. It was not Malmo where I lived however.
“Sweden is deeply ironic. I lived there for 6 months in 2015…
I thought everything was a ‘me problem’ until a colleague, picking up on my discomfort, took me out for coffee & cake and said she was from Stockholm but 20 years of residency still didn’t make her accepted.”
This is fascinating and important, but why might it be so? Why has Sweden seemed increasingly culturally closed?
I also found that “Putin as the source of all dangers” aspect of the Swedish recognition of the strategic importance of cash to secure the robustness of their payments system against power failures, cyber attack or other IT cock-ups amusing. I suppose were there no Putin, it would be necessary to create one.
Meanwhile, what nation is behind the most financial surveillance and interdiction? Why, good old Uncle Sam and company …
Recent NYTimes headline:
Russia Hits Ukrainian Power Plants, Further Straining Energy System
The country’s power system has been so damaged by Russian strikes that Ukraine imported 225,000 megawatt-hours of electricity last month, according to Energy Company of Ukraine,
Your point is, what?
As long as Sweden (or others) don’t kill Russians then Russia has ZERO interest in hitting your energy centers/equipment. News flash: There’s nothing that Russia would want with all the failing (resource-depleated) European countries.
The European leaders are using Russia as scapegoat for the impending energy shortages which will occur by their own hands!
Congrats on being a NATO stooge.
Brett Scott also often tackles the dangers of cashlessness in his Substack, most recently here:
https://www.asomo.co/p/the-cost-of-cashlessness
Does Sweden not have floods, fires, unexpected freezes, heatwaves, and other natural disasters that kill the power and any cashless transactions?
My 6 months there included depths of horrid winter but no power cuts.
However I do wonder how things will be after they’ve experienced decades of neoliberalism like the USA/UK and everything starts to break down. They’re very heavily invested in that failed ideology so the results will become clear one day.
Amazingly, investing in infrastructure (through resiliency and redundancy) reduces the impact of “natural disasters,” though anathema to neoliberalism – privatize and profit by running the infrastructure into the ground) Visiting Scandinavia, one sees impressive infrastructure, whereas the US –
Consider how vulnerable Haiti is to natural disasters. The US is heading for the Haiti model, not the (former) Scandanavian model. If you look at days without electricity in the US hmmm….
no info on the US.
https://www.nationmaster.com/country-info/stats/Energy/Electrical-outages/Days
https://www.indexmundi.com/facts/indicators/IC.ELC.OUTG/rankings
https://data.worldbank.org/indicator/IC.ELC.OUTG
Amazing, even the world bank has no info on the US!!!! Strange…
I’m totally with you on need for investment in infrastructure. Trouble is the native Swedes I worked with had already realised that Sweden had quit doing this. Now they’re waiting for the aftermath in 20 years.
Of course nobody can point to “infrastructure collapse” because few people realise there’s a time lag. But the roads round here in UK remind me of the “non touristy” roads in Manhatten that I tried walking on circa 2005: utterly third world.
Funny about that “Draw Out Some Cash Day” in Oz. I live in the joint and there was no mention of it on the news. So strange. While reading this, I was imagining two short videos that could be produced. One would be where people woke up one day to find the internet was down for a coupla weeks. Then the fun begins. How do you fill up on gas at a garage? Take a taxi or Uber? How do you pay for it. Supermarkets would be closed. The food would still be there but there would be no way to buy it and some of it would be rotting on the shelves. How do business loans get rolled over or wages get paid. What if it is time to pay your water or electricity or rent? Everything is still in place but there would be zero way to conduct daily commerce.
The other video that you could make is to track a person’s life through their digital cash and to see where they went. What they did when they went there. What interests that have. Which bills they pay and who to. Who they contribute money to. In short, you could map out an entire person’s life and just hope that hacker’s never get a hold of this data. Before cash went away, you could have some money at home to tie you over in an emergency. But with digital cash, it is not possible to have a digital cash reserve. It all goes away. The only reserve that you can have is a cupboard full of food to tie you over. Cash is like an insurance policy for our modern world. We all hate paying out the money for it each year but thank god if we need it.
IIRC correctly NC linked to a study showing that cash use post-COVID 1st/2nd stage of pandemic has rebounded heavily in the UK.
Living in one of the most marginal constituencies of the UK who sees how local businesses work, the return of “lower charge if cash payment” has been observed and is interesting. People round here do routinely use cards and phones for “swipe” paying but they’ve got pockets full of cash too.
Indeed the Notts news was last week dominated by the high rate of “ATM robberies”. I only use ATMs located IN a bank branch. Thugs on bikes and e-scooters are all around.
Regarding “lower charge if cash payment”
My Wisconsin town must be one of the “marginal constituencies” Terry Flynn wrote about.
The smaller independent merchants, like barbers & a couple of others, will often discount the price a tad if using cash money. But you have to ask, and it helps if you are a known regular. This is a result of the high fees the small merchants are charged for using a card to pay with. It does not work in a large store or chain type business where the clerks are just powerless clogs in a machine.
Thanks. I’m in UK but I’m guessing similar things happen. There are “subtle” points made in discussion with regulars that facilitate cash transactions that avoid sales taxes. My dad had picked up on such inferences but when you supply Embassies etc but are not “part of the establishment” you don’t cut corners.
This is why I am looking forward to the defeat of our truly *#&!ish Tory MP, a man with a chronic health condition but who voted through NHS cuts.
I enjoyed this report immensely. Maybe people will wake on this issue before their central banks and governments make a huge mistake.
“… history only records six characteristics for money. It is with the development of digital money systems that a seventh characteristic for money becomes apparent:
Money should be free of counterparty entanglement
Where digital money systems require even the most basic transactions to involve third parties for payment clearance, there is no guarantee that money will fulfill it’s function as a medium of exchange.”
https://www.pmbug.com/threads/the-seventh-characteristic-of-money.6960/
The article touched on the fees involved in the “cashless society”.
Those fees are a major source of revenue for banks, and those fees stretch faaaar out onto the horizon (they’ll go on forever). Got pricing power? Few customer alternatives? Got free money.
The thing banks don’t like about cash is that they’re the ones responsible for (paying for) the handling of cash. They want to get rid of that cost, and replace it with a revenue stream (fees on txns).
So that’s one obvious, compelling reason for the banks to advocate for cashless. The other reason, of course, is control and surveillance. And then there’s counterfeiting, and that’s clearly a cost to society, but I have no idea what the scale of that cost actually is.
The government and the banks want you to use digital money. But be comforted: they are here to help you, and will diligently look out for your interests, as they always have.
When transactions are truly anonymous, and the transaction costs are borne by a government bank (socialized fees), then we can be more supportive of the cashless plan.
The other benefit of having cash – just the specter of it, not necessarily the wide-spread use of it – is that it’s an alternative. A bulwark against the obvious abuses of the cashless plan.
Banks are pretty good at shifting the cost of cash on to customers: ATM fees. Lockbox fees for businesses.
The LINK system has done a lot to eradicate ATM fees in UK. But funny that the ATMs outside betting shops aren’t part of LINK /snark
Dad runs a business and has already geared himself up for a tax showdown because he sold Japanese Shoji blinds to the Dutch Embassy in London but then (more crucially) to the Ambassador’s soon to be retirement residence at The Hague. He knows he has jumped through the zillion hoops but unfortunately he’s not a Tory MP to have rules ignored.
Does your father make Shoji screens in the UK or import them? I’ve often dreamt if finding a Japanese carpenter here!
He makes them. However he uses an artificial fibre instead of washi paper to stop them being destroyed by cats/kids. It’s so good that Japanese immigrants have bought loads, one even commenting that she was glad it would fool her very traditional parents when they came to visit.
Ironically he realised the material was similar to that used in surgical masks in 2020 so retooled to produce PPE. He got zero interest from Boris. No doubt because he wasn’t a mate. But loads of the public took notice and bought them. I manned the front desk. And promptly got my first almost fatal dose of COVID. *sigh*
Operating a business gives me a good look at the friction in the economy due to VISA/MasterCard. Since the vast majority of retail customers are via online sales, our rate for processing a card is the ‘card not present’ 3% rate.
This means every single dollar of gross comes with a 3% tax. We don’t pay it, of course, we hike prices to cover it so the consumer is who actually pays it. But work through the simple math for the implications. The big picture.
For a typical business where after expenses and taxes they earn free and clear in the region of 10% of gross this means – just for processing the transaction – these banks are taking for themselves . . . 33% of the pie.
When they speak of lower fees in Europe, they are SIGNIFICANTLY lower. Me? Every single time we have a recession, I buy bank and insurance company stocks.
Own a car? Must have insurance. Government forces you. Own a house with a mortgage, again, must have insurance because bank forces you to. Manage anything but menial amounts of money, similarly, you must have a bank.
In the aggregate these form monopolies in all but definition because they raise prices with impunity and repress rates paid on savings every time they can.
Show me a business that doesn’t wish for the awesome power to raise prices where their consumers have no choice but to pony up. Bottom line, this is capital business don’t have available to deploy productively. The vampires suck it away for shareholders, of which I am one due to prudence.
This is why I beg readers to send checks. Even with paying one of the admins to do the slog of depositing them now that I can’t readily, we come out markedly ahead.
I hope this doesn’t sound facetious but do you have a feel for which countries still “do” cheques? I think it’s 20 years since I wrote one and I doubt my bank or building society would process one today .
The US.
Are there any others? Do most people even know what we’re talking about?
That’s what worries me.
NOBODY in the UK thinks of writing a cheque. My parents’ bank explicitly told them not to attempt to write one. I THINK they can’t refuse to honour them but they’ve certainly made it the case where we believe we can’t use them.
I don’t know about this. Several banks will accept cheques via a phone app. In the app just photo both sides of the cheque and upload them to the bank.
Only older leople know what a cheque is and 1% can use a smartphone without getting hacked. So your point is?
My sainted mother regular writes cheques in the UK. She also deposits them.
More to the point, several large organisations still issue them. We receive wayleave payments over our land from BT, National Grid and the water company, all by cheque. We also receive our VAT refunds and income tax refund from HMRC by cheque. We deposit them using the deposit machine in the bank, which credits them same day.
What *has* been abolished is the ability to guarantee a cheque payment (for readers in other countries, using a cheque guarantee card obliged a bank to honour it, making the cheque quasi-cash).
In Europe banks will issue and accept cheques — but in most cases the processing costs are horrendous.
The last time I used one was not long after the introduction of the euro, and to my dismay, the fees for processing cheques in euros in the eurozone had become higher than the costs of foreign exchange for banknotes pre-euro.
What I always wondered is why are cheques so much used in the USA instead of bank transfers (with IBAN and all that)?
Oh, I should have added to my list of cheque payors that we receive tiny dividends from a South African company in Rand, the cost of processing which far exceeds the value! Presumably the cost if issuing and posting them to the UK with an annual report the size of a telephone directory (remember them?) is prohibitive too (figuratively – they keep sending them). We just throw them away.
There’s no way to even donate the shares to charity. An asset with negative value for all concerned!
A lack of a giro system, from what i can tell.
I second gk’s report. Just today I used a check to buy $1,100 worth of industrial inventory rack (like the warehouse retailers use) from a vendor I’ve never done business with before.
He _asked_ me to bring a check. If I’d paid by credit card the vendor would have charged me 4% more.
I was wondering why they’d bet $1100 worth of credit risk on a person they’ve never done business with. I filled out no credit application, nor did I present any identification at any time during the transaction. And this is a fairly big business, with several big locations in mid-Atlantic U.S.
I asked the salesman: “how do you know I’m not a deadbeat?” in the email I used to confirm the order.
He didn’t answer the question. Probably because I’m so famous. (yes, sadly, I am kidding).
Famous or not, I have a farm, and I sell hay, many hundreds of dollars’ worth per transaction. I ask for cash, and I don’t do credit cards, and in a pinch I’ll take a check, but I don’t like to unless it’s a customer I’ve done biz with in the past.
But people want to pay cash, they want to avoid those credit card fees, and the people that buy or sell a lot of stuff – like farm operators and used equipment dealers – people whose customers are paying attention to costs … they, and I, really want to use checks, and it’s still fairly common here in the U.S.
I am seeing signs or notices that offer 3, 4, or even 5% discount if you pay cash. That’s common where I live (outer edge of a major cosmopolitan area, mid-Atlantic U.S.), and I hop right on those sort of deals whenever I see them.
Here in Chautauqua County, NY, cash and checks are the preferred medium at the smaller, non-chain businesses. In the past few weeks, I have paid for a tiller and a battery-powered lawn mower (a total of over $2,000) with checks. I asked the store owners which they would prefer, credit card or check and checks were enthusiastically endorsed. I guess I could have pushed for a discount, but I was new to the business and want to build up some good will: I will rely on them for maintenance and repair of this machinery.
Brazil’s adoption of digital payment methods (“PIX” for those who know it) is driven mostly by sheer convenience and a vague sense of security, but the country can’t simply rule out the printing of money because the internet coverage and access to it is still insufficient and unreliable across the country.
Brazil is continental, but demographically far more people live in costal cities than in the land lock states and those who resided there still rely heavily on cash. However, Brazilian banks are pushing this idea in smooth ways. The Bank of Brazil for instance quietly abolished the withdrawal of R$5 (and I think R$2) notes from its ATMs in great city areas making R$10 sack the minimum possible amount one can draw at any time. The result is that even transactions under R$30 are now more probable of being done through digital payment system than in cash.
Cashless economies offer governments more pressure points that they can control citizens with.
No way they are going to pass up an opportunity like that. Might as well put out a kilo of uncut pure pharmaceutical-grade honk in the middle of an investment bank on a Friday night, but warn the fratboys and bros working there that cocaine is dangerous and also against the law, see…..
Much the same dynamic in Norway as well, with the abolishment of cash being pushed because of crime prevention. While at the same time people are advised to keep cash on hand for emergencies. And ever so often is a small notice in the news about some back end services being down for the better part of a business day, making it bothersome if not impossible to transact digitally.
Another complication is that due to a wrinkle of history, the most relied on piece of ID was the bank debit card (photo, name, date of birth). But now that is being phased out, likely because of more stringent ID requirements from EU (biometrics needed to be baked into a chip, same as passports, best i can tell).
And this is coming after the nation went through a whole know your customer rigamarole, where people needed to ID themselves to their bank using an ID from a different source.
But hey, at least we can now send money to feel good causes without leaving the chair. Just grab your phone and fire up that app…
Gotta admit Norway depresses me. I always thought it was the “most sensible” part of Scandinavia. Clearly I was wrong. Though truth be told their immense sovereign wealth fund should have rung alarm bells: why hold foreign assets that could be seized when you should be massively upgrading everything in your own country?
(Yes I know Norway did a lot of investment but my point is they should have used ALL oil profits to do a LOT more). They turned out to be “just less stupid than us Brits…. Not a high bar to scale”.
“why hold foreign assets that could be seized when you should be massively upgrading everything in your own country?”
Because the oil and gas industry is a massive employer. I think even right now Norway is looking at a high 90% employment number.
Thus in order to do on shore projects, the government and its contractors have to overbid oil to find the people to do the jobs. Norway went though a period of trying that in the 80s, referred to as jappetiden, where the economy got “overheated”.
So instead most of the money is parked in securities, with a percentage of the profits from that used to “balance” the national budget.
Never mind that most of the public services are foisted on the municipal level that see barely anything of said budget anyways.
And you can basically trace it all the way back to the 80s-90s, as the neoliberal thinking seeped into Arbeiderpartiet (Norwegian Labor Party). Since then it has been some variant of NPM and public-private partnerships doing the rounds.
It will be fun listening to the regime explain how the illegal drug trade still exists in a cashless society
Casino owners have lots of political pull, and they will never go for it
Indeeed. I doubt there would even be a dip in fines on banks caught facilitating drug money laundering. Maybe we’d see a bump.
In other news, the sale of detergents are an all time high…
On a different note, Norway has caught an unusually high amount of cocaine making its way to the Nordics.
A question for those familiar with the day to day retail environment:
do businesses still have those devices where a credit or debit card is laid down and imprinted on a paper receipt? It would seem to be an adequate backup in case of a digital network being down.
Cards do not even come with a raised number any more. Or at least my Visa enabled debit card has not had that in ages.
Closest i have seen was when some mobile payment terminal could not get in touch with the bank, it switched into a special mode that printed a massive receipt that the customer had to sign. But i don’t know the details as i was just watching from nearby when it happened.
And that was back before every card got a microchip, never mind NFC, added, so it was all based on the passive data stored on the magnetic strip.
Not sure how the NFC stuff works in terms of card to terminal or card to bank, but the microchip supposedly verified both the terminal and the bank via digital certificates before handing over the payment data.
‘Cards do not even come with a raised number any more.’
Hey, what about the blind. You have bank notes with raised bits so that blind people know at a touch what value of bank note they are using. The only way that I can see that working for digital currency is through auditory messages on apps and the like. How have blind people in countries like Sweden adapted?
What about the electronic card readers? Most card readers assume the card us embossed. Now that smooth cards are being issued in the UK, many readers fail to read them correctly, insisting “card not present”. The railway company had this problem but the guards had figured out that slipping a paper train ticket (which is credit card sized) beneath the card was enough to make contact with the chip reader. Woe betide the Millennials who all download their tickets! Especially now onboard service has gone cashless.
There’s another really important reason that the powers that be are getting rid of cash~
Try this experiment next time you are at a retail store and hand cash over to the clerk, who then uses a counterfeit detector to suss out whether said semollions are real or not…
Ask him or her how often they receive bogus bills, as this is your opening, and they are somewhat of an ‘expert’ in the field~
You’ll be amazed at their answer, typically a clerk will tell me ‘5 or 6 counterfeit notes in the past week’ or something like that.
Here’s how the counterfeiting game used to go, say 40 years ago:
You would need $100k (in 1984 $’s) worth of offset printing machines, hand engraved steel dies of the obverse and reverse of notes, and were likely limited to just a few serial numbers for the production of bogus bills, as those hand engraved steel plates were about $5k per side, and most importantly, the counterfeiter needed to have all these skills, to be able to print passable money.
The hardest part then and now, is getting the paper right~
Today, utilizing a compromised color printer that allows you to make facsimiles of banknotes, your budget for making bogus money is closer to almost nothing.
A day at the races…
About a dozen years ago i’m entering the parking lot @ Santa Anita, and proffer the parking guy a Benjamin for the $5 fare, and he says to me ‘oh no, we can’t take hundreds’ so I fish out a Jackson, intrigued that one of the last places in the world on a strictly cash basis in terms of wagering, is welshing on my Franklin Daddy Warbucks?
I get up to the information kiosk, and there’s a 8 1/2 by 11 piece of paper with a ‘know your counterfeits or altered banknotes’ how odd?
So I ask a clerk at the gate what happened?
The day before, Santa Anita was taken to the tune of hundreds of thousands of $’s in that the bad guise had taken $5 banknotes and bleached them (this was the variety before the notes that have a huge purple 5 on one of the corners on the reverse) and overprinted them with $100 Benjamins, resulting in a tidy 2,000% increase in value!
The tricky part would be of course where you bet those altered articles, as you wouldn’t want to end up back with them when cashing a larger wager on a favorite to show. (come in 3rd of better)
The $5’s have a watermark of Lincoln and the $100’s a watermark of Franklin, and if you looked close enough you’d notice that they look different, but the most important thing back then in terms of counterfeit detection was the paper, and the paper was of course perfect, being of FRN stock.
Like anything, the counterfeiters/alterers are nipping at the heels of high technology, and we made it so easy for them.