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Ditching paper: Which country will go cashless first?
Britain is becoming a “cash-second” nation. On Tuesday, Visa Europe said contactless payments in the U.K. soared by 11.5% in 2015, while boasting that point-of-sale spend had risen 9.6%. Kevin Jenkins, the firm’s MD for U.K. and Ireland, even told Finextra that in five years’ time cash will be seen as a “peculiar way of paying for things.”
His comment chimes with a statement made by Payments UK in December that predicts in 2016 the total volume of all non-cash payments made by consumers will exceed the volume of consumer cash payments for the first time.
Is cash about to be replaced in the U.K.? “Not yet,” says Payments UK CEO Maurice Cleaves, but we are on our way. In the meantime, a number of other countries are in the race to become the world’s first economy to ditch paper currency. In no particular order, here are some of the front runners:
Google “cashless society” and Sweden will invariably pop up in your search results, and for good reason. Having been the first European country to adopt paper money in 1661, Sweden now is aiming to completely ditch banknotes and coins by 2030. Many think it will be the first to do so.
Last October, Stockholm’s KTH Royal Institute of Technology claimed there are now less than 80 billion Swedish crowns ($9.6 billion) in circulation, down from 106 billion six years ago. What’s more, only around 40-60% of that is actually in regular circulation, with the rest being stored away or traded in the underground economy.
Sweden has serious competition in the shape of Denmark. Like its Scandanavian neighbour, Denmark is also looking to completely eradicate paper money by 2030. The Danish Chamber of Commerce said in June last year that it wanted most stores to get rid of their cash registers by this month. Already the vast majority of retail sales in the country are now cashless, even — according to this PaymentWeek article — at hot dog stands. Meanwhile, the use of cashless payments services is accelerating, with P2P platforms like MobilePay being used by 30% of the population.
Let’s face it, the Nordics, in general, are big on dumping cash and Norway is no exception. The country’s biggest bank DNB was in the news this week calling for the end of cash. Its rationale is interesting. The Independent reports that the bank estimates that of the 50 billion kroner ($7.2 billion) in circulation, just 40% is in government control, the rest is being used for money laundering and other black market activity. The hope is that going cashless will help stamp out illegal economic activity. In its drive to become cashless, Norway is taking a proactive — some might even say aggressive — approach. Several banks already refuse to accept or offer cash transactions in their branches.
Australia may have some way to go before it becomes a no-wallet nation but if a recent survey commissioned by Mastercard is anything to go by, it citizens are ready for it. The report shows that 66% of Aussies prefer to make touch-payment for transactions under A$100 ($69) instead of entering their PIN, and 64% favoring it as a payment method over cash. The introduction of New Payments Platform — an industry initiative to build a new mobile-based payments infrastructure for low-value payments — in 2017 is expected to be a game changer for payment in Australian. Some think it could even herald the end of cash payments altogether.
Compared to Europe and North America, cash remains popular in Asia where carrying around a big wad of notes is still fairly common practice among those who can afford to do so. But South Korea is trying to change that. Earlier this month, The Korea Times reported that the Bank of Korea is planning a scheme whereby people who pay in cash get their change via payment cards. In the short term, the country is looking to go “coinless” by 2020, but the ultimate goal is a cashless society . However, the legal obstacles involved in doing so are significant, the government has said.
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