Denmark took a step toward becoming the first cashless country in the world as the government considers eliminating the obligation for certain retail outlets to accept hard currency.
The government said that clothing retailers, gas stations, and restaurants should no longer be legally bound to accept cash. Essential businesses such as medical clinics and grocery stores would still be required to accept cash.
The government stated the change could be in place as early as next year.
The move may not be as radical as it sounds—Denmark’s central bank no longer prints bills or mints coins (having outsourced that to a third-party), one-third of Danes use the Danske Bank smartphone app to pay for purchases, and almost everyone has a credit or debit card.
The proposal, which comes ahead of the election in September, is touted as a money-saving measure.
The Danish Chamber of Commerce supports the move on the basis that retailers will save money on security measures and time counting cash at the end of the day.
Less hard currency circulating would also make changes to fiscal policy easier to implement. Currently, Denmark has a negative interest rate, designed to encourage spending and investment, and fees are incurred by those who deposit their money in the bank. Experts believe some Danes may be stashing cash under their mattresses to avoid such fees.
It is thought that the policy may also help eliminate tax evasion and make harder for criminals to operate undetected. However, the proposal raises serious security concerns. Critics cite the case of nearby Sweden, where cash is rarely used and there are more bank transactions per person than anywhere else in the EU. Electronic fraud has doubled in Sweden during the last decade.
Around the world, other countries are moving slowly away from cash. Digital payment options like Paym, Google Wallet, and Apple’s Passbook are increasingly popular. Canada recently retired the penny coin, and low-value coins in the United States have cost more to produce than their face value for some time. At the other end of the scale, high-value bills like the 500 euro note also cause problems. According to estimates from the Serious Organised Crime Agency, the majority of 500 euro bills are handled by criminals.