"And I beheld, and heard the voice of one eagle flying through the midst of heaven,
saying with a loud voice: Woe, woe, woe to the inhabitants of the earth....
[Apocalypse (Revelation) 8:13]

Friday, September 30, 2016

Cashless Society: The Countries Where Cash Is Going Extinct

Cashless Society:  The Countries Where Cash Is Going Extinct

My dad, a former Wall Street trader always advised me “cash is king” and to “hold on to it” when the economy gets tough.
I can’t remember the last time we received a cash payment
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.

The rise of online transactions and contactless has seen cash payments fall sharply in many countries (Credit: Getty Images)
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
How to make money
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.
The first supermarket in the Netherlands with self-scan (Credit: Ton Koene/VWPics/ Alamy)
Albert Heijn opens a grocery store without cashiers, the first supermarket in the Netherlands where you can pay by self-scan (Credit: Ton Koene/VWPics/ Alamy)
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.

Inside an M-Pesa store in Nairobi, Kenya (Credit: Trevor Snapp/Bloomberg/Getty Images)
An employee in an M-Pesa store in Nairobi, Kenya where mobile payments are now used for millions of transactions (Credit: Trevor Snapp/Bloomberg/Getty Images)

Cultural ties
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%.
 I know my daughter uses the Venmo app for everything. It frankly made me feel old and outdated
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.