Cash is to suffer the plight of the Dodo bird.
When the homeless guy on the street corner who’s trying to sell you the daily paper flat out tells you that he no longer accepts cash, not even as an alternative form of payment, but instead pulls out a card reader and asks you to swipe, When your Sunday Church trades its proverbial bucket for an app it now passes around to its parishioners to collect tithes, you might think that King Cash has lost its cachet, in trouble, and fighting to hold on to its crown.
Such is the unfolding melodramatic narrative on the status and usage, or lack thereof, of cash in Sweden. The citizens of Sweden, the home of Spotify and King Digital (Candy Crush game maker) , are talking bad about cash, mounting a full frontal assault against it and yearning to get rid of it pronto. If the swedes have their way, Cash will soon be trash.
A Nation of Firsts
Even though the idea of using paper money as evidence of a promissory note to pay a bearer on demand originated in China during the Han dynasty in 118 BC , Sweden was the first European country to ever introduce national bank notes as legal tender (ie, paper money) and an accepted form of money in 1661. But the Swedes love affair with cold hard cash in the digital era has faded faster than the speed of light.
A small but growing and very vocal chorus of cash abolitionists (led by the biggest Swedish banks and the Swedish government for that matter) is spearheading the effort to do away with the physical currency altogether and has made big headway in its efforts. The small Scandinavian country is well on its way to becoming the world first cash-free society.
Cash circulation is down to a paltry 11% of all financial transactions. Banks are frowning up on and refusing or strongly discouraging cash deposits and withdrawals and reportedly hold less than 2% of their total deposits in cash. ATM machines are being removed and converted to museum artifacts. The Riksbank (Swedish equivalent of US Mint) activities are an all time low. For the first time cash finds itself under assault and on the “endangered species” list along with the proverbial dodo bird.
A Brunette (Cash) Never takes it laying down from a Blonde (E-money)
This is the part where I feel compelled to cuss up a storm and rain it on all the cash doomsday predictors. But… never mind. To put it bluntly though, cash may not be eternal (nothing is) but has a lot of staying power and beaucoup fight left in it. It is not going away anytime soon and for a myriad of reasons. Chief among them are the reasonable level of privacy it affords its bearers and the ability to evade the watchful eye of Big Brother, all of which are all but removed with any form of e-transaction. A reluctance on the part of the consumer to overspend is also an often cited compelling reason to transact in cash. In other words, cash imposes discipline in spending.
Don’t you dare talk bad about my Cash. Oh Yes I will… Oh No You Won’t
Among the Cash supporters, Privacy advocates — for whom Privacy is the apogee of individual liberties — want more anonymity, particularly asking for cash transactions to coexist with and be treated the same as any new form of e-transaction and not as a third rail. Their main argument for cash revolves around the rise in electronic fraud (which shot up by almost 10 fold) and the growing pool of bad guys who may never even be able to identify Sweden on a Map but yet can relatively easily cause tons of damages to individuals and institutions alike with just a few keystrokes. This, in some way, and in the mind of cash proponents, completely negates any convenience and benefits attributed to e-transactions. Cash always works at all time. The same cannot be said about E-money which relies 100% on technology that is not 100% fool proof or 100% reliable at all times.
For cash detractors, determined to brandish the convenience and safety playbook, the mantra is to scare people away from cash by citing a litany of safety concerns — drastic decrease in Bank robberies, individual safety, elimination of counterfeits currency and a treasure trove of data available to people for better financial decision making.
Winners and Losers all around
The fight between the two camps has reached a fever pitch. Battle lines are drawn, people are taking sides. Winners and losers are already emerging. Momentum is certainly going the way of cash abolitionists, but cash is not going down without a fight. The biggest winners are the ones you might expect. They include Banks, government surveillance authorities, Big Data companies and yes, Online fraudsters, but the losers, besides a senior population who is mostly risk and technology averse, are not who you might think of first. For all I know, the same winners cited above may turn out to also be the biggest losers. There’s definitely something to be said about being victim of your own success.
Progress toward a 100% cash-free world is inevitable, the train has already left the station, but will be a very slow going progress. Here’s a quote from Jeffery Born that is sure to quell any worries that cash proponents may have about the onslaught of e-money zealots and at the same time gives the cash detractors hope. “Just as the check did not end the need for cash, debit and credit cards or bitcoins are not going to end the need for currency,” says Jeffery Born, professor of finance at Northeastern University’s D’Amore-McKim School of Business. “The ratio of currency to other forms of money may continue to decline, but it’s hard to imagine the ratio going all the way to zero.”