This article caught my eye.
https://www.msn.com/en-us/money/markets/‘no-cash’-signs-everywhere-has-sweden-worried-it’s-gone-too-far/ar-BBJogIJ?li=BBnb7Kz
Evidently the Swedish government is concerned that they may be transitioning too quickly to a cashless society.
Here are a couple of quotes that puzzle me.
I’m not an economist or a banker. What ‘cash handling infrastructure’ and ‘negative spiral’ are they talking about? What does this mean in layman’s terms?
Possibly that there will still be some people who want to use cash - elderly people maybe who don’t like or want credit/cash cards. If “36% never use cash” then that means that 64% still do, at least sometimes.
The ‘cash handling infrastructure’ is obviously the tills in the retail outlets and the cashiers at the bank. The ‘negative spiral’ will be the way that as fewer people use cash fewer retailers will bother to accept it until the eponymous little old lady cannot buy anything because her Kronas are not wanted anywhere.
The negative spiral is that once a smaller number of customers are paying in cash, it makes less sense for stores and businesses to do things like have cash registers that accept cash, train cashiers to accept cash, staff a cash counting back room, have procedures for dropping cash in to the safe regularly, hire armored cars to pick up the proceeds, etc. Those stores will stop taking cash, so more customers will start to pay electronically, and once they are able to do so, they may stop paying cash altogether. So fewer cash-paying customers -> fewer cash accepting stores -> fewer cash-paying customers ad infinitum.
It’s unclear from the article but I think by “cash handling infrastucture” they mean bank branches, cash registers and everything in between, such as armored trucks, coin counting machines, vending machines that take cash, etc. I suspect they might be worried that options to pay in cash will disappear almost entirely, leaving just a small set of non-competitive (i.e., expensive) options for routine things like buying groceries or paying utility bills in cash. Perhaps they are also worried about the structural unemployment effects that could result if you do away with all the jobs related to cash handling but I’m just reading the tea leaves.
Note that cash is a payment system which always works, unless electronic transactions. A great many of us have been in situations where the credit card processing system is down at a retailer or our card is rejected because of “suspicious transactions”–because we have made a large purchase or are traveling in a far away area.
It’s not just a theoretical concern. There’s already a Starbucks in downtown Seattle experimenting with not taking cash. While there have always been cases like airplanes and ski resorts - and maybe certain businesses in high-crime areas - that have been cashfree, this is the first store I’m familiar with that
a) is in the middle of a major metropolitan area
b) is in a business where the average transaction price is under $10
and c) has humans on staff during all open hours
that has stopped taking cash. (Well, maybe the Amazon Go store, but that’s a whole different model.) It’s an experiment, sure, but if successful, I wouldn’t be surprised to see this being rather common in ten years.
How much of that is due to bathrooms at gas stations needing 5 Krone, though? That’s the only time I needed to use cash in 15 months there. For example, a lot of gas stations are fully automated pumps with no associated convenience store; you can only pay by card. The assumption is that you will pay by card, IME, and that was already 5 years ago.
American banking system, or from a country where bankers know what an IBAN is?
Well, it will sure disrupt a lot of hole-in-the-wall restaurants around here that are cash only. Mainly Asian places.
…
Of course, I think most of them are doing it so they can cheat on their taxes more easily. So it’s unlikely to be considered a downside by the powers that be.
Cash is so versatile that it isn’t going away for a long, long time.
You don’t need electricity or anything to use cash. If you want to give a dollar to a homeless man on the street corner, how likely is it that he would have a powered chip reader or some other device to handle money (if you were cashless?)
A couple of months ago, The New York Times ran this article about several NYC restaurants that went cashless. Many also appear to have transaction prices under ten bucks.
It’s not just little old ladies who don’t like change.
I don’t know what it’s like in Sweden, but here in the U.S., it can be difficult or impossible to get a bank account if you are poor and don’t have good credit. If you are homeless and lack I.D. it is impossible.
What are those people supposed to do? Sit on the corner begging for gift cards?
I don’t see a problem with businesses like Starbucks going cashless, but the convenience store on the corner probably still does a lot of cash business.
Actually, in some places, beggars accept donations by credit/debit card.
I’m sure that is true, but I’d bet they are in the minority.
Of course they are in the minority now but as the use of cash decreases, it will be more and more common for them to offer an alternative.
Thanks. I can remember a few years ago having the opposite problem, where my (now-) wife and I had lunch only to learn they were cash-only. I had to leave her behind as a hostage while I went to scurry about and find an ATM.
There are still cash-only places, like the really good taqueria near my office. (But they have an ATM right there in the dining room.)
But they are only an option for those with the resources to have a bank account, which, as I noted above, can be problematic or impossible for many of those on the fringes of society.
State lotteries are usually cash-only. Certainly are in this state and I expect others too. I think the reason is to keep gambling addicts from burning through their credit and then not being able to pay their gambling debts. Or at least it slows them down. What are they going to do if we go cashless?
My wife tried to buy a lottery ticket on the Ontario gaming commission web site. They have a complicated system where you have to sign up for an account and you have to tell them the maximum amount of money you’re allowed to gamble in a week. Then you load some money from your bank account into an account on the web site, and finally you’re allowed to buy a ticket using that account.
Yup, can’t gamble on a credit card. And due to the federal government being a bunch of penis heads cannabis based businesses are barred from the banking system, which includes credit card POS terminals. Most dispensaries have an ATM in the lobby but you gotta buy your weed with cash. Strip joints–strippers take money and I sincerely doubt they’re going to change their minds any time soon.
Strippers won’t be too happy, but if you had to go to the bar with your credit card to buy scrip that you could give to the dancers, I’m sure the house would be happy to provide such a service, while charging the ladies a “token service fee” to redeem the scrip.