In a recent podcast on LTP, Mehul Desai (of the C-Sam fame) told us,"Cash replacement is very different from cashless. And in our lifetimes, at least, we might not see a true cashless world." The buzz these days is about mobile wallets and cash replacement products. But what are we really doing to go towards a cashless society? Well, Denmark seems to be doing something for sure.
Last year, I wrote a piece about the story of the most successful payment systems in the world and it was not about the US. I had discussed about Nordic countries and how they are ahead of the curve when it comes to the vision of making their country cashless. In countries like Sweden, Denmark and Norway, it is already a norm to use mobile for transit tickets, buying online or paying at store.
Now the Denmark government seems to be working on a plan to allow merchants to choose if they want to go cashless. There will be no restriction on them to accept cash and they can choose not to. This will be specially true for retailers such as restaurants, clothing stores and gas stations. I am just amazed by the understanding that the Danish government has developed in this space; they are going right to the fountainhead and attacking the problem. A right approach to a great cashless economy in general and a successful digital payments system in particular will always (also) include solving payment issues and working with and for the merchants.
A new policy change has come up through the Danish government’s pre-election package of economic measures which aims at reducing costs and increasing productivity for businesses. From an administrative standpoint, the government is of the belief that cash acts as kind of a financial burden for retailers.
The new cashless rules would come into effect at the beginning of next year. However, these rules won’t be applicable to medical professionals, pharmacies, post offices and grocery stores. Only on a parliamentary approval will they be allowed to adopt cashless payments.
However, the government will have to face more challenges from the rising risk of fraud with the rising use of electronic payment systems. It’s good thinking and a good start nevertheless.