Problems transitioning to a cashless society

Factual Questions
21

“Paying a utility bill in cash” is not a routine thing in Sweden or Scandinavia in general. Local banks have been closed down in droves, and remaining branches often don’t handle cash, just customer service related to loans and opening an account.

I found a 2013 thread illustrating this. Someone asking how the heck they are supposed to deal with 30 000 kroner in cash. Her local branch told her to use a specific ATM, some of the replies told her to find one of the few branches that accept cash.

Banks have not been adding cash handling since then, rather the opposite.
Others in the thread have mentioned it might be difficult to get a bank account for some. This is a very minor issue in Norway. You can get basic banking services with just your name, address and national registration number. The minor issues come into play if you move here from abroad, in which case it takes a little longer to get an account and you have to show up in person, if you’ve managed to become an adult without ever getting an account or a passport, in which case it’ll cost you $100 dollars or so, or if you’re in Norway illegally, which makes things almost impossible for so many other reasons as well.

That doesn’t mean there aren’t real problems with going completely cashless, but the people who’ll have trouble are so few the PTB are more likely to work on ways to get them into the banking system than to keep the system of cash going.

22

Underline mine. I realize they’re two different countries, promise I know it, but if getting one of those can be as difficult for a legal non-immigrant foreigner as it was for me in Sweden… it’s the paperwork equivalent of an infected tooth. Mind you: I had zero problems using my Spanish cards, my British and Latvian coworkers had zero problems using any of their own.

Do you know if foreigners can open a bank account with their passport, in Norway? In Sweden I couldn’t.

23

You need a passport, documentation of employment or legal residence and the bank will file for a so called D-number for you. (It’s a national residence registry number for non-permanent residents.) But yes, it’s more paperwork, and you can’t do web-based banking (but you might do app based … crazy, I know).

24

I think most people posting here are failing to comprehend the thrust of the article being discussed by the OP. That article noted that, as cash becomes a disfavored method of payment in Sweden (there’s a nifty graph showing the reduction in cash in circulation as I recall from reading it yesterday), the whole system for handling cash could implode. This would mean that the use of cash would become extremely difficult, if not impossible in Sweden. So it wouldn’t matter that there would still be situations in which using cash would make sense, because cash effectively wouldn’t be available.

Now, the US of A being quite “backward” about its cash in the first place (see: retention of the penny and the dollar bill), that’s likely a long way off for us. It also helps in some way that the world’s economy is run on the American dollar. There is a substantial amount of American cash that remains outside of the internal national banking system, which could provide a pool of available cash should our own cash system start to implode. But clearly, it would be a good idea to start trying to figure out how the marginal in our society will deal with a cashless society. Obviously, Sweden will be figuring that out before us.

25

The UK is way behind Sweden in this respect, but banks are obliged to offer accounts to people with very low incomes. Thes “basic” accounts only deal in transactions; no credit is allowed. The holder has a card that they can use to pay bills or to draw cash from an ATM, so long as they have enough on deposit to cover it. This is what you have if you live on benefits - the benefit is transferred to your account weekly.

Very few people in the legitimate economy are paid cash because no business wants the risk and inconvenience of handling it. Cheques are almost totally obsolete too.

26

I pay an allowance weekly to my young son. A few dollars. I can’t imagine how I could pay him in anything but cash. He’s too young to have any kind of bank account.

27

You can keep a log of “credits” that he can accumulate and when he wants to use them, you buy what he wants with your card.

Not perfect, but it would work.

You could even use something like poker chips to keep track, so he could have a pile of “money” to handle.

28

Buying groceries and paying bills are routine transactions. I never suggested that in Sweden paying for them in cash is routine. The whole article makes it clear that there is nothing routine about using cash in Sweden. The article implies that having nowhere to spend or use cash might be a problem, particularly for the elderly who aren’t part of the digital economy, without really saying why. I said that eliminating cash from the economy causes people who use only cash to be unable to complete routine transactions, like buying groceries and paying utility bills. Please let me know if you disagree.

You have suggested that Norway has solved the problem of what some call the “unbanked” by making it trivially easy and cheap for nearly everyone to get a bank account. You conveniently ignore what happens in a society to the few who aren’t part of the privileged majority, such as the people who are in Norway illegally. Maybe the policy decision is that illegal residents can starve to death because no one can or will sell them groceries for cash. Well, that’s one solution I suppose.

The article suggests that Sweden wants to keep cash around without saying why. Sweden’s unbanked are the elderly who might never adapt to electronic payments. Sweden may also be concerned about what happens if there is a payment network failure or widespread power outage. Sweden’s solution to these problems might be keeping cash around as a viable option for a little while at least.

29

Equivalent coins exist in many places, but see “still paying in cheques” and “getting a bank account can be difficult”. Sweden and the US (and from what naita says, Norway) require a person to have a national tax ID before opening a bank account; most countries in Europe and Latin America don’t. Here’s my money, here’s my passport, can I have a bank account please. In Spain you will have problems if you appear in the National List of Bad Debtors, but getting in that one requires some serious and dedicated effort.

30

Cash is always better, you always know exactly how much you have, you don’t rely on electricity, you don’t have to worry about someone stealing your data or whatever and you don’t have to worry that you’d be blocked for whatever reason. Perhaps cards are more comfortable to carry around, but I’d take safety and security over ease of carrying any day of the week. There are drawbacks of course, mainly about online payment, but that’s why there should be both, forcing people to use only credit cards is something a totalitarian country would want to do, a normal country would give it’s citizens the choice to pay any way they want.

31

JakeRS, you seem to have invented a situation that’s completely different from the real one. The issue is that the immense majority of Swedes are not interested in using cash, therefore more and more private businesses are stopping to use cash, therefore the government is worried that the rare person who wants to use cash will not be able to. The government (that people that you’ve automatically jumped to labelling “totalitarian”) are trying to defend people’s freedom to use multiple means of payment, including cash; they’re not trying to remove it but rather the opposite.

32

Bank accounts can and have been obliterated, seized under erroneous information and in the US seized because some overzealous cop is certain it was obtained in some criminal manner and the burden of proof is on the owner to prove otherwise. There’s no appeal to asset forfeiture and getting your money back is a long and arduous process without any clear hope of recovery. Banks have information leaks so often they might as well install drains on the fucking things and information gets compromised on the regular.

Think about it–if your bank accounts suddenly ceased to exist, how do you keep food on the table and a roof overhead? Having a goodly cash stash in a solid fireproof lockbox is no bad idea, especially when you live in a country where shit goes adrift more often than anyone is willing to admit. It’s also nice to be able to lead your day to day life without leaving a data trail for whoever feels like making something of it–it’s nobody’s damned business how often I put gas in the car and where I travel, what I eat and how often or any other information that gets winnowed out and sold to the highest bidder. Get outta my pocket!

33

And merchants should, of course, have the choice to be paid how they want, right?

I find it odd that you say ‘Cash is always better.’ It has its pros, sure, but some cons as well. I don’t like to carry around a large amount of cash because of loss and robbery risk (the latter is even more significant for merchants and banks), and I don’t like to go to the ATM particularly frequently. So that means I use a card probably most of the time, and cash for particularly small transactions. Like Starbucks. Except when, you know.

34

Check his location, Do Not Taunt.
SmartAleq, most countries do not allow forfeiture the way the US does. That is one thing in which the US is exceptional.

35

Fast-casual salad chain Sweetgreen has gone completely cashless.

36

Yup, and so long as the bills say that they are legal tender for all debts public and private the onus is on the receiver to either take cash or figure out another method to have the debt satisfied. Committing to going cashless in the US is a crap shoot and not one I’m willing to play.

37

The fact that cash is legal tender means you have a right to settle your debts in cash. It doesn’t mean you have a right to make purchases in cash. Merchants/providers don’t have offer goods or services for cash sale if they don’t care to.

38

And I don’t have to indulge them in their affectations either. Plenty of vendors in the world and the ones who’d rather give up 3% of every purchase servicing their card preference have more than one problem with their business model.

39

You don’t have to indulge them in their affectation. But the issue raised by the OP is that, if enough merchants develop this affectation, eventually this becomes a bigger problem for you than it does for them.

40

SmartAleq, are you perhaps a small business owner? I’ve asked a few proprietors who don’t accept credit cards why they don’t; paying in cash is really inconvenient for me, and I’m sincerely curious about why a merchant would put up barriers to its customers. I’ve asked maybe seven or eight of them about this, and every one essentially saw credit card processing fees not as overhead (like rent and the cost of inventory) but an arbitrary reduction in the profit the merchant has rightfully earned.

Your point about the grave errors made by every non-cash-accepting business (like, you know, Amazon and Apple’s app/music/media sales business) is more than a bit silly. I can’t help wondering whether you feel you have some personal stake in cash payments. Maybe not, but I thought I’d ask.

Hmm…no, that’s not what you said. You said merchants were obligated to take cash or propose a non-cash, non-credit-card alternative that the buyer finds acceptable.

I’m pretty sure we agree that civil forfeiture, (a uniquely American practice, as Nava points out), has dire implications for due process and the rule of law. But do you really think a bundle of cash is less likely to be seized in civil forfeiture than money in a bank account? Stashed bundles of cash—lockbox or no—are routinely seized in civil forfeiture. I wouldn’t be surprised if the value of cash siezed that way dwarfs that of bank accounts siezed under the same (odious, IMHO) pretense.

You suggest that cash would come in handy if bank accounts ceased to exist, but I’m struggling to imagine a sudden bank-account-ending scenario that doesn’t also make cash worthless.The US dollar is a fiat currency, remember? :wink:

I can see why the collapse of the commercial cash-handling system could present real problems for the unbanked and otherwise vulnerable, sure. But cash is already an abstraction, albeit an analog one. It would be straightforward (in technical terms, if not political ones) to create the equivalent abstraction-processing infrastructure for digital abstractions.

The US cash-handling system amounts, essentially, to private banks working hand-in-glove with the Federal Reserve/US Mint to print, distribute, handle and collect paper bills and metal coins. A US-government-sanctioned blockchain, for example, could serve as the currency-processing infrastructure that supplants our current expensive[sup]1 2 3[/sup], theft-prone[sup]4[/sup], spoofable[sup]5[/sup] and sometimes violent[sup]6[/sup] cash-handling infrastructure.

Credit cards and cryptocurrency certainly have their flaws, but they’re not worse (and might be better) than the implicit burdens that come with cash. But again, both cash and all the newer systems are just abstractions that make it easier to exchange value with others.

It’s sort of like arguing over whether it’s better to read the news on newsprint or on one’s phone. Newsprint has undeniable charms, but the flexibility of electronic delivery has a charm all its own. But no matter the medium, the information conveyed is the same.

[sup]1[/sup] Ever get a quote for bank vault construction? Those things aren’t cheap!
[sup]2[/sup] In the US, at least, we pay a lot of people to handle cash: retail workers, tellers, armored car drivers and guards, mint employees, etc.
[sup]3[/sup] ATM fees can be punitive in the US. A nearby bank is on the site of my city’s nationally-famous farmer’s market, where a moderate-but-dwindling plurality of merchants only take cash. The fee to use that ATM is either $6 or $8. $4 is not that unusual elsewhere. Merchants who only take cash may not have to worry about arbitrary fees, but their customers sure do.
[sup]4[/sup] In an extraordinary coincidence, cash-only businesses are grossly overrepresented in among the ranks of those who underreport their earnings to the IRS. If these businesses paid taxes at the statutory rate, that rate could come down a bit for everyone.
[sup]5[/sup] Counterfeiting!
[sup]6[/sup] Assault during a mugging is not unusual in the US, and, though I have no cite, a small but countable number of people are killed each year ferrying cash to banks for small, cash-heavy businesses.