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Digital Values is published by Nets, and it is our ambition to create a magazine packed with high-quality articles and interviews that take a probing look from various perspectives at the many ...

Digital Values is published by Nets, and it is our ambition to create a magazine packed with high-quality articles and interviews that take a probing look from various perspectives at the many opportunities and challenges presented by digital developments in society today.

In particular, we will be addressing the aspects of digitisation that are also the main part of Nets’ DNA, i.e. digital money, digital identities and digital information. That is what we call digital values.

The theme of this first issue of Digital Values is barriers and opportunities on the road to a cashless society. In a series of articles and interviews, we examine progress so far within and beyond the Nordic Region when it comes to reducing the amount of cash in circulation, the positive arguments for striving towards a cashless society, and the obstacles to be overcome along the way.

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Nets Digital Values issue one 2014 Document Transcript

  • 1. IssueOne/2014 by Nets by Nets Money, Money, Money- but not in cash Former member of ABBA Björn Ulvaeus has a vision for Sweden Are people ready to go cashless? New Nordic survey sheds light on the matter Cash or digital payments? A simple question worth billions of euros Say goodbye to large notes How removing them can reduce moonlighting and crime Reaching the next level of payment evolution Will consumers stick to banks as providers of payment instruments? IssueOne/2014 Issue One / 2014 Theme: Towards cashless society 01-01-2014_1
  • 2. january 2014, Copenhagen, Denmark. 2013 Digital Values by Nets®. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of Nets Holding A/S. Unlawful use of this publication is covered by the Danish Copyright Act. The information contained in this publication has been obtained from sources the proprie- tors believe to be correct. Nets cannot be held responsible for information or statements in this publication which turn out to be incorrect. Furthermore, Nets cannot be held responsible for content that does not derive from Nets but is included in this publication deriving from third parties. If Nets becomes aware of any incorrect information included in this publication, we will make efforts to issue a statement correcting this, but accept no legal liability. DigitalValuesbyNetsispublishedbyNetsHolding A/S, Lautrupbjerg 10, 2750 Denmark. There are twoannualissuesandbothareprintedinBallerup, DenmarkbyRosenbergBogtryk.TheeditorisKlaus Sejr Madsen (ksmad@nets.eu). The contributing editorsareMichaelJuulRugaard(mjrug@nets.eu) and Frode Riis Andersen (frand@nets.eu). To subscribe, please visit www.nets.eu or send a request to subscription@nets.eu, and add your contact details. For any other enquiries or ques- tions relating to our magazine, please contact digitalvaluesbynets@nets.eu. ISSN 2246-2503
  • 3. About Nets Nets specialise in managing digital values through the delivery of strategic consulting and IT solu- tions. We enable a more efficient society and optimise our customers’ business through the way we handle money, information and identities digitally. We have one of the most extensive product portfolios in Europe and our ambition is to become an even stronger partner to our customers by supporting their business, nationally as well as internationally. Nets has 2,800 employees in Denmark, Norway, Finland, Sweden and Estonia and a yearly turnover of EUR 850 million. Find out more about us at www.nets.eu.
  • 4. Table of contents The value of digitisation for the future Nets’ CEO Mette Kamsvåg welcomes you to the first issue of Digital Values. The use and cost of cash across Europe Europe is anything but homogenous when it comes to the use of cash and the digital alternatives. However, clear patterns are emerging from region to region. The consumer paradox of cash and the Scandinavian opportunity Consumers in Sweden are favouring card payments over cash in most situations. Given that, it seems plausible that con- sumers would not be concerned if cash disappeared. But do consumers’ ideas harmonise with their actions? According to Niklas Arvidsson, Associate Professor at the Royal Institute of Technology in Stockholm, they do not. Money, Money, Money – but not in cash He advocates digitisation in Sweden, he wants to see cash consigned to the scrapheap, and he has just opened his own – cashless! – museum. Read our interview with Björn Ulvaeus, one of the two Bs from the legendary 1970s pop group ABBA. ABBA The Museum ABBA The Museum – perhaps the first cashless museum in the world – opened to the public in May 2013 in Stockholm, Sweden. In brief … Cutting through complexity – reaching the next level of payment evolution Payment solutions today rest on the pillars of globalised card infrastructure and transfers using automated clearing houses. Will the information age with its technology-driven avalanche of innovative consumer offerings change this, or will consumers stick to banks as providers of payment instruments? The Nets suite of mobile services Nets is in the process of bringing to market a suite of mobile services that will allow banks and merchants to interact with consumers in new ways without having to replace current processes and systems. The cashless society is the way ahead Although many shops and customers like cash payments, the Danish Chamber of Commerce recommends that shops should be allowed to decide for themselves whether they wish to accept cash, going forward. 6 8 10 16 24 25 26 32 34 4 Digital values
  • 5. Table of contents Dansk Supermarked ready for contactless payments TheDanishretailchainDanskSupermarked is preparing for a future without cash. The first steps are the introduction of new terminals that will ultimately enable consumers to pay using contactless cards and mobile phones. In brief … Exporting the cashless society The Nordic countries are in a unique posi- tion to create the world’s first cashless region. It would save them billions of kroner, e.g. by reducing moonlighting, and could even be the start of a highly lucrative export adventure. Read our interview with Norwegian Professor of informatics Kai A. Olsen. Cashless shouldn’t equal helpless Digitisation and the development of new digital payment solutions need to take all groups in society into consideration. Some groups face particular challenges that need to be addressed and dealt with. Empowering people through digital payments The world’s poorest people are hugely dependent on cash. This contributes to keeping them in a vulnerable position. According to the Bill & Melinda Gates Foundation, financial inclusion and digital payments are part of the solution. Nordic cash survey A brand new survey shows that a weekday without cash is fine for 56% of Nordic consumers. Still, most agree that access to paying in cash is a right everyone should have. Perceived convenience and habits are the main drivers for using cash. Nets’ view: Let’s cash in on digitisation What conditions must be met if a country or a region wants to realise the vision of a cashless society? Towards the digital wallet New contactless payment solutions using a card or mobile phone have obvious advantages for banks, merchants and consumers alike: faster, cheaper and simpler transactions with less cash and greater security. Eika Kredittbank is one of the first banks in Norway to implement these solutions. New payment trends in Finland The Ministry of Employment and the Economy in Finland has set up a working group to find ways to reduce the use of cash in the Finnish economy. In brief … Notes 36 39 40 50 52 56 60 66 70 73 74 5 Cashless society
  • 6. Digital Values is published by Nets, and it is our ambition to create a magazine packed with high-quality articles and interviews that take a probing look from various perspectives at the many opportunities and challenges presented by digital developments in society today. In particular, we will be addressing the aspects of digitisation that are also the main part of Nets’ DNA, i.e. digital money, digital identities and digital information. That is what we call digital values. Each issue of the magazine will deal with a selected theme, and in addition to our own staff writers, we will invite external sources to contribute knowledgeable insights into the theme in question. The theme of this first issue of Digital Values is barriers and opportunities on the road to a cashless society. In a series of articles and interviews, we examine progress so far within and beyond the NordicRegionwhenitcomestoreducingtheamount of cash in circulation, the positive arguments for striving towards a cashless society, and the obstacles to be overcome along the way. One of the key areas, when it comes to the advantages of eliminating cash, is moonlighting and criminal activity, which is largely dependent on high-denomination notes in particular. We discuss The value of digitisation for the future this with Norwegian Professor Kai A. Olsen from the University of Bergen – see p. 40 – who has been working with this topic for a number of years. He believes the countries that choose to go all the way with digitisation of payments will be able to reduce moonlighting and, in addition, the vision of the cashless society could become a valuable business case in itself. The Swedish Associate Professor of Industrial DynamicsatKTH(theRoyalInstituteofTechnology), Niklas Arvidsson, points out – see p. 10 – that although cash payments have been decreasing in Sweden for many years and although the Swedes prefer digital payments in their daily life, the major- ity of the population still consider cash almost a human right. Niklas Arvidsson calls this phenomenon “the paradox of cash”, and our own Nordic survey – see p. 56 – conducted especially for this edition of Digital Values confirms the paradox: on the one hand, the market overall is evolving towards digitisation; only 45% of Nordic consumers carry cash on a daily basis and many consumers proactively avoid using cash. On the other hand, 53% still agree that access to paying in cash is a right everyone should have. Overall, Danish consumers seem to be more willing Welcome to the first issue of Digital Values, which will be published twice a year in the Nordic Region and northern Europe. 6 Digital values
  • 7. than any other consumers in the Nordic countries to accept a cashless society. Finnish consumers seem to be the most reluctant. Underthe optimistic headline “Cashless shouldn’t equal helpless” – see p. 50 – Sverre Fuglerud from The Norwegian Association of the Blind and Partially Sighted (NABP) points out what it would take for blind people and other disabled people to experi- ence a future of digital payment solutions as an improvement in their everyday lives rather than yet another barrier. Inthesamevein,TorbenE.HoffmannRosenstock, chief consultant at Denmark’s largest trade organisa- tion, the Danish Chamber of Commerce, contributes an article – see p. 34 – on the potential for reducing the number of shop robberies if Danish shops were grantedthefreedomtodecideforthemselveswhether or not they wish to accept cash. Furthermore, we met Björn Ulvaeus, best known as a member of the former super-group ABBA, but who is now a keen advocate of Sweden’s need to exercise its potential to become the world’s first cashless society – see p. 16. Finally, we also present a number of articles by Nets’ own staff, looking for instance at the costs of using cash incurred by merchants, banks and society at large, and offering some suggestions as to which new payment solutions will contribute to further reducing the amount of cash in circulation and supplementing the types of digital payment we are already familiar with. We hope Digital Values will be of value to you, the reader. And to ensure the magazine is as relevant as possible, we would welcome comments and sug- gestions from our readers. Feel free to write to us at digitalvalues@nets.eu, or to contact one of the magazine editors directly. • Happy reading! CEO, Nets Mette Kamsvåg Mette Kamsvåg, CEO Nets 77
  • 8. Words Michael Juul Rugaard, Nets image Getty images The use and cost of cash across Europe Europe is anything but homogenous when it comes to the use of cash and the digital alternatives to cash. However, clear patterns are emerging from region to region, and for large parts of Europe, cash will presumably continue to be king for many years to come. S wedenwasthefirstcountryinEuropetotake the progressive technological step towards issuing bank notes. That was in 1661. Today, Sweden is still at the cutting edge, but this time as the European country that uses the least cash – at least, according to the report The social and private costs of retail payment instruments1* (2012) by the European Central Bank (ECB), which looked at the costs and popularity of a range of payment methods in 13 selected EU Member States. Significant differences In its report, the ECB asserts: “On average, cash is still the most frequently used retail payment instrument.” Evidently, cash accounts for as much as 69% of payments in the 13 selected countries (for all EU Member States, the figure is 65%), but this masks significant differences between the countries, with a distinct tendency for cash to be much more prevalent in countries in southern and eastern Europe than countries in northern Europe. At just 26.64% cash payments, Sweden has made the most progress towards replacing cash with other paymentmethods.Denmarkcomessecondat34.85%, and Finland comes a close third at 38.82%. At the opposite end of the spectrum, the keenest users of cash are found in Greece, where as many as 94.99% of the country’s payments are made using notes and coins, Romania at 94.88%, Italy at 82.66% and Spain at 77.86%. As regards the use of payment cards, Denmark came out on top in the study at 44.03%, with Sweden in second place. Romania is at the bottom with just 1.54% card payments. low decrease even in northern Europe Although the use of cash is considerably lower in the north than in the south and east, the amount of cash in circulation is not significantly decreas- ing even in northern Europe – if at all. In a new study, Sweden’s central bank, Riksbanken, compared cash trends in the three Scandinavian countries – Sweden, Norway and Denmark – from 2007 to 2012, and although the value of cash relative to GDP has decreased for all three countries (by 7.7% in Denmark, 16.7% in Norway and 26.8% in Sweden), “Sweden is the only country to show a distinct reduction in the nominal value of cash in circulation. The reduction in the other countries is related to the fact that growth in the amount of cash in circulation is lower than growth in GDP.”2 Costs follow the same pattern Looking at the distribution of the social costs of cash payments versus card payments in the various countries and regions of Europe, there, too, are significant differences between northern Europe and the southern and eastern regions. In the countries of southern and eastern Europe, which are currently massively dominated by cash payments, the price of cash payments is relatively low, while the cost per card payment is considerably higher. The exact * Please find notes for this article at p. 74 8 Digital values
  • 9. opposite is the case in the most northerly countries with large numbers of card payments, where social costs per cash payment are higher than the cost per card payment. The ECB concludes its report as follows with regard to the striking differences across Europe: “Due to relatively high usage, the cost of cash is nearly half of the total social costs. On average, cash payments show the lowest unit costs, followed closely by debit card payments. However, in some countries, cash does not always yield the lowest unit costs. In fact, in more than one-third of the sample countries, debit card transactions have lower unit costs than do cash transactions.”3 The Riksbanken report compared the three Scandinavian countries with Italy and Hungary, and a very clear picture emerges here, despite the fact that card costs include both debit cards and credit cards (Figure 1). A spLIt conclusion The conclusion, then, has to be that Europe is anything but homogenous when it comes to the use of cash. On the one hand, the reality today in a number of countries remains that “cash is king”. Despite the potential for reductions in the costs to society by way of converting cash payments into digital payments in these countries, the tipping point for favouring digital payments still remains a long way off in the future. Even today, they are hugely dependent on cash, and digital payments remain a long way from the critical mass needed to bring the costs per digital payment down below the cost per cash payment. On the other hand, for a number of countries in northern Europe, further investment via digitisation would seem to make sense in socio-economic terms in order to capitalise on the fact that digital payments now cost less than cash payments. • figure 1: Social costs of cash and cards 2007 2009 ECB 2009 Norway Denmark Italy Sweden Hungary Lowest Highest Average Cash Socio-economic cost (SEK millions) 4,248 8,260 83,900 8,592 7,911 Proportion of GNP (%) 0.15 0.38 0.52 0.28 0.80 0.49 Socio-economic unit cost (SEK) 8.59 10.50 3.50 8.32 2.79 1.38 8.32 4.35 Cards, total* Socio-economic cost (SEK millions) 6,513 5,166 17,800 8,749 1,886 Proportion of GNP (%) 0.23 0.24 0.11 0.28 0.19 0.21 Socio-economic unit cost (SEK) 7.21 5.89 12.59 5.55 10.78 2.34 85.70 14.23 * Includes card payments at the point of sale and for distance selling using debit and credit cards. Sources: Banca d’Italia (2012), Nationalbanken (the Bank of Denmark) (2012), Gresvik and Haare (2009), Schmiedel et al. (2012), Segendorf and Jansson (2012) and Turjån et al., (2011) Total socio-economic costs4 of payments for the 13 countries are assessed in the ECB report as being EUR 45 billion – corresponding to EUR 130 billion for all EU Member States or 1% of total GDP in the EU.5 9
  • 10. Words Niklas Arvidsson, Associate Professor The consumer paradox of cash and the Scandinavian opportunity 12 10 8 6 4 2 0 120 100 80 60 40 20 0 1950 1960 1970 1980 1990 2000 2010 Share of GDP (%) Nominl value (Billion SEK) Source: Riksbanken Figure 1. Value of cash in circulation in Sweden, 1950–2012 10 Digital values
  • 11. C ash payments have been decreasing con- stantly in Sweden in recentdecadesandare expected by many to continue decreasing as card payments and also mobile payments gain groundasattractiveservices.Since 2009 we have seen an interesting development as the gross value of cash in circulation denominated in SEK actually decreased for the first time since 1950. The value of cash in relation to GDP in Sweden had been decreasing for a long time, but now we also saw a decrease in actual gross value (Figure 1). But the low use of cash is somewhat unique to Sweden and the other Nordic countries. In 2011, the value of cash in circulation in relation to GDP was 2.4% for Norway, 2.7% for Sweden and 3.5% for Denmark, which can be compared to 7.1% for the USA and 9.4% for the entire European Union in 2010. Looking at market shares of retail payments, we see that the number of cash payments is low in the Nordic countries (figure 2). The Nordic countries are among the most cashless societies in the world. It is clear that consumers in Sweden are favouring card payments over cash payments in most situations when these two alternatives compete. Given that, it seems plausible that consumers would not be concerned if cash disappeared and a more or less cashless society was realised. But do consumers’ ideas harmonise with their actions? Do they “walk the talk”? To actually be able to answer such questions, I participated in a recent study in collaboration with Insight Intelligence, Sigma, Västtrafik and .SE. We designed a survey and engaged SIFO to conduct telephone interviews with a sample of 1,000 Swedish consumers aged 15 and over who constituted a representative sample of the Swedish population in August 2013. The results were intriguing. The walk The consumers’ use of cash illustrates the data from the Riksbank (Sweden’s central bank) that was presented above. Around 64% of the population use cash every week, and it is used primarily in situations where there are few alternatives to cash, such as paying a friend, making payments at temporary markets, small purchases from smaller merchants and paying for pur- chases made from sellers coming to your house. Not surprisingly, this involves smaller amounts. Card payments were used more frequently than cash – 83% used card payments every week – and were used in situations such as e-commerce, at restaurants, for parking, at museums and for public transportation tickets. Thus, consumers use cash but not as much as they use card payments. No news here. So what was the interesting part, you may wonder. Here it comes. The talk Two-thirds of the respondents – 67% – say that cash is a “human right”! There is a strong emotional connection to cash among Swedish consumers that does not match their behaviour. They do not “walk the talk” and this is an interesting paradox. Even if people – in general – do not seem to be dependent on cash transactions, having it is still considered a human right. Another question in the survey gives a hint as to why this is the case. More than a third of the respondents – 39% – believe we will never see a cashless society in Sweden and about a quarter of these – i.e. around 9% of all the respondents – argue that this is because cash is such a deep-rooted tradi- tion that it will never go away. And they have a point. Sweden has had coins for 1,000 years and banknotes sincethemid-1600swhenJohanPalmstruchreceived the King’s permission to start a bank that issued ▶ Niklas Arvidsson 11 Cashless society
  • 12. 0 10 20 30 40 50 Danmark Estonia Finland Greece Hungary Ireland Italy Latvia Netherlands Portugal Romania Spain Sweden CARDS 0 20 40 60 80 100 Danmark Estonia Finland Greece Hungary Ireland Italy Latvia Netherlands Portugal Romania Spain Sweden CASH FIGURE 2: MARKET SHARE IN % OF RETAIL PAYMENT INSTRUMENTS PER COUNTRY IN TERMS OF VOLUME
  • 13. Sources: ECB Statical Date Warehouse and European System of Centralbanks ▶ 0 5 10 15 20 25 30 Danmark Estonia Finland Greece Hungary Ireland Italy Latvia Netherlands Portugal Romania Spain Sweden CREDIT TRANSFERS 0 3 6 9 12 15 Danmark Estonia Finland Greece Hungary Ireland Italy Latvia Netherlands Portugal Romania Spain Sweden DIRECT DEBITS 0 1 2 3 4 5 CHEQUES Estonia Finland Greece Hungary Ireland Italy Latvia Netherlands Portugal Romania Spain Sweden Danmark 0 3 6 9 12 15 OTHER Danmark Estonia Finland Greece Hungary Ireland Italy Latvia Netherlands Portugal Romania Spain Sweden Danmark Estonia Finland Greece Hungary Ireland Italy Latvia Netherlands Portugal Romania Spain Sweden
  • 14. banknotes. That bank – Stockholm Banco – went bankrupt in 1668, was taken over by the state, and became what is known today as the Riksbank. The idea of cash is strong! A cashless society? Can Sweden become a 100% cashless society? Well, theoretically it could, as the number of elec- tronic payment services that can substitute for cash transactions is increasing by the minute. If consumers, merchants, banks, telecom operators and other stakeholders all move in this direction, it could happen. We can at least imagine a society where cash payments are reduced to a minimum. The study showed that 45% of the respondents believe Sweden will be a cashless society in 20 years. But there is a catch. There is always a catch. Or rather, several. First and foremost, the law states that cash pay- ments are legal tender and must be accepted as a payment method. Even if merchants are allowed to state that they do not accept cash, public organisa- tions and banks must accept cash. A cashless society needs a political decision that cash is no longer allowed. In asking whether that could happen, we first wonder when such a decision could be made? Well, Sweden is just about to introduce new notes and coins and the old ones have been around for 30 years. If the new ones have the same longevity – which primarily is decided by the risk of counterfeit money and the quality of the notes and coins – we can expect politicians will have to make a decision to introduce the next version of notes and coins in around 20–25 years from now. That is sometime in the period 2033–2038. Will they say yes or no to another round of notes and coins then? Who knows? But what politician will argue that cash should no longer be a legal payment method when 67% of the population see cash as a human right? Making Sweden cashless is not a political stance that would win an election today, that’s for sure. And this discussion is, of course, based on the assumptionthatSwedenstillhasthegoodoldSwedish Krona. If it has been replaced by the Euro in 2033, we can be certain that Sweden will have cash even after 2045. As we know, the Eurozone is much more in favour of cash than the Nordic countries and it is a daunting task to convince all the countries and all the consumers in the Euro area to disallow cash. Finland is consequently more likely to be stuck with – or (depending on your own view) fortunate enough to have – cash than Sweden, Norway and Denmark 30 years from now. Then we have another catch. Will consumers, merchants, banks, telecom operators and other stakeholders all move in this direction? We have already seen that even if consumers do not use cash, they want it. And of course some consumers do not access the advanced payment services. There are consumers without bank accounts, without debit and credit cards and without mobile phones. They must also be able to make payments if we are to have a cashless society. This is an important challenge. What about the other actors? Well, this is where the interesting strategic game is being played now – right in front of our eyes. Banks are launching their versions of payment services that may substitute for cash. Card scheme operators have their versions and mobile network operators have theirs. And the challengers, innovators and invaders – whatever you prefer to call them – have their versions. Even if most of these want to see cash replaced by electronic payments, they all have their own idea of how this should happen. And sometimes they collaborate, but sometimes they compete. This is, of course, exactly how it should be in a market economy characterised by competition, but it constitutes a transition chal- lenge. How will interoperability – the most critical component in a payment system – be realised in a situation where head-to-head competition to win the largest number of consumers and merchants via new and innovative services is a reality? Perhaps we will see a period of low interoperability in the new services and a large number of providers, followed by a shakeout and increasing interoperability. Not unlikely. Can we hazard a guess as to how this will happen? Well, guesses usually prove to be wrong. One can make some observations, though. The card schemes are already supplying close to global interoperability, and if the new services rest on these schemes, the interoperability challenge will be easier to deal 14 Digital values
  • 15. with. But this would also mean that the scheme providers will continue to dominate the payment industry, which is something regulators in Europe do not favour. The new Payment Services Directive takes a strong stance against the level of card fees and it is in favour of new actors to challenge the incumbents. Politicians are likely to continue their regulatory efforts to drive down fees in the payment system if card schemes continue to dominate the scene. And, as in all situations where some players are strong, there will be new ones wanting to enter the scene. Some will be new and small, but some will be big and strong in other industries, like telecom operators or social media companies. We will see more intense competition in the payment industry, but an even more interesting question – to me, at least – is: in which areas and how we will see friendly collaboration among peers and others, and in which areas we will see intense competition between peers and others? To achieve a good outcome from this develop- ment, both those who need payment services to sell their products and services and consumers wanting to buy those products and services need to be critical and make strong demands concerning what the payment services should look like. Research shows thatcriticalcustomersconstituteacriticalcomponent if innovation leading to sustainable business models is to be realised. In addition, supervisory agents in the financial markets must assist them. So, am I a pessimist? No, I wouldn’t say so. Even if the Scandinavian markets are small, there is strong innovative capability in firms and entrepreneurs – as seen in the large number of innovativecompaniescomingfromtheScandinavian countries – and the companies often aim to provide solutions that can be used throughout Europe. And – why not? – all over the world. The potential for this to happen is great. I believe we are actually seeing what people in the future will call the birth of the Scandinavian payment cluster right in front of our eyes. This is more interesting than whether or not cash is eliminated (even if the potential problems with a cashless society must be dealt with appropriately). So, the innovation show has started. Play, watch and enjoy! • 15 Cashless society
  • 16. He listens to Beethoven, goes kayaking, drives an electric car, in- vests in renewable energy, advocates digitisation and wants to see cash consigned to the scrapheap. And he’s sold 370 million records and has just opened his own – cashless! – museum. His name is Björn Ulvaeus, one of the two Bs from the legendary 1970s pop group ABBA. Words Michael Juul Rugaard, Nets Images Claudio Bresciani Money, Money, Money – but not in cash Björn Ulvaeus 16
  • 17. O ne afternoon with towering skies, I meet Björn Ulvaeus for lunch at Godthem restaurant, situated in a 19th-century wooden villa surrounded by tall decidu- ous trees just five minutes’ walk from the new ABBA The Museum. I’ve just come from the museum, where I stood in the spotlights on a darkened stage and sang “Dancing Queen” from 1976 together with four life-like ABBA avatars, and as I shake hands with the real-life Björn, I still have the melody and the lines “You can dance, you can jive, having the time of your life” running through my head. Both the ABBA museum and the restaurant are located on the recreational island of Djurgården, close to the centre of Stockholm. We order home- made Swedish blood pudding with roast pork and lingonberries, which happens to be the menu of the day, and which Björn says he hasn’t had for ten years. He smiles and fills his glass with sugar-free cola, and before I can manage to formulate my first question, he takes charge of the interview … Björn Ulvaeus: I’m glad you wanted to talk about this matter of the cashless society. I wrote an article for the Norwegian newspaper Verdens Gang about the subject a few years ago because I believe Sweden – and Denmark and Norway too – would be the ideal societies to get it all started, as we have small currencies that are only used within our countries’ borders. In the meantime, I’ve met Anders Borg [Sweden’s Minister of Finance. Ed.] a few times, but I’ve never managed to ask him what’s holding us back. Next time, I’ll remember to ask him. I’ve asked other people, however, including a number of bank directors, and none of them has really been able to explain to me why we don’t just go all the way and eliminate cash, which would make it impossible for the country’s burglars to get away with stolen computers, TVs, jewellery and so on within Sweden’s borders. What do you think? Michael Juul Rugaard: A centuries-old tradition of cash, perhaps? Force of habit; uncertainty about the alternatives? BU: Yes, but if we sort of expose those habits and look more closely at them, they’re quite easy to eliminate.IfyouaskSwedeswhosaynotoeliminating cash, as a gut reaction, to say what exactly they absolutely must use cash for in Sweden today, well, they don’t really know. So perhaps the answer is that if children are going to buy ice cream from a kiosk, it’s practical for them to use notes and coins? But this can be dealt with using a cash card instead, and ultimately, when you get down to the nitty-gritty, cash isn’t absolutely essential anywhere at all. So on closer inspection, what people thought were good reasons for retaining cash don’t really exist. MJR: But apart from tradition, some people resist because notes and coins are perceived as more tangiblethandigitalpayments,whichmayappear more abstract, don’t you think? BU: Maybe, but what could be more abstract than transferring a value to a piece of paper – a bank note? A symbol of value – that’s rather abstract, isn’t it? That’s every bit as abstract as reading a text message on your mobile phone that says an amount has been deducted from your account for a particular purchase in a particular shop. It began with a burglary MJR:Butlet’sgobackastep: Howdidyouactually start thinking about this matter of a cashless society? BU: The reason was that my son had a number of burglaries in his flat, within a short space of time. His computer, stereo, branded clothing and things like that were stolen – things that the thieves could immediately take to their fences and convert into cash. And that got me wondering what they would have done if cash didn’t exist. That was the start, and I enjoy analysing things that puzzle me, so I wrote this article where I asked the question: what would burglars do in a cashless society? And it generated a bit of debate. ▶ 17 Cashless society
  • 18. MJR: But some would no doubt say that, for your plan to work, the whole world would have to be cashless, because otherwise the thief could just drive his loot out of Sweden and convert it into cash elsewhere? BU: Yes, but that would mean he’d have to get out of Sweden, and he’d have to explain why he had received money in his account in Sweden, because he wouldn’t be able to use euros or any other foreign currency in Sweden, if Sweden had gone cashless. So, what could he do other than have a bank account, with traceable transactions? MJR: But some people would object that if you take away cash, criminals would just come up with something else – maybe they’d start paying in gold instead? BU: But can you imagine how trading in gold would work between the fence and the burglar? And would the gold then be used to buy milk and bread or whatever? Ha, ha… how could that possibly be practical? It just wouldn’t work… MJR:Ormaybetheycouldpayinvirtualcurrencies like Bitcoins? BU: Yes, but the burglar is a consumer like you and me, and he might have a family and all sorts of things and lead a normal everyday life like the rest of us, and you can’t lead a normal life in Stockholm if you have to base it on Bitcoins. You can’t buy a train or bus ticket with Bitcoins or go shopping in the supermarket. It just wouldn’t work in practice … forget it! MJR:Ihadachatwiththetaxidriveraboutcashless society on the way here today, and his concern – which many others no doubt share – was that this is another step towards a Big Brother surveillance society. What do you think about that concern? BU:Butwe’realreadyasurveillance society, and removing what’s left of the cash from society wouldn’t make any difference, unless you’re a criminal and you’re trying to conceal your illegal activities. It’s just an irrational feeling that can easily be punctured if you’re open to reason. Anonymity is hyped MJR:Butaren’tpeoplerighttobe concernedthatgoingdigital–as has been happening in many areas in recent years, especially in the Nordic Region – means we become less free as citizens, and that our chance to be private and anonymous is being taken away from us? BU: I’ve given that a lot of thought, and I’ve come to the conclusion that it doesn’t matter at all if people see me when I’m walking around the streets of Stockholm, and for people to know who I am. It doesn’t matter to me, and I think it’s OK to live in such an open society. And basically, it’s probably unavoidable. I picture the whole Earth as a single gigantic network where everyone is ultimately linked to a single enormous brain. Björn Ulvaeus 18 Digital values
  • 19. MJR: As many of us already are, in part, via the Internet… BU: Yes, in many ways we are already, and we are becoming more and more linked, and it really doesn’t bother me. I mean, what would I use my anonymity for anyway? MJR: And you’re saying that even though you’ve been famous in most parts of the world for years and years… BU: Yes, of course, I’m a bit different in this respect, but as long as there are places I can retreat to for a bit of peace and quiet, that’s fine by me. MJR: And is that possible? BU: Yes, it’s entirely possible, and I don’t see how that could be changed. No one is allowed to install cameras in my house, so it’s enough for me to have the freedom to be myself in my own home. When I’m walking around in public, I don’t have a problem with being visible. And when I’m paddling my kayak in the Swedish archipelago, I feel a great sense of freedom, and I don’t mind if there’s a satellite somewhere up there watching. So the anonymity you’re talking about in defence of cash – it’s of no value to me. I don’t think that’s a valid argument for maintaining the cash system. MJR: But let’s assume you were living in a country that’s not democratic, and where you didn’t have yourconstitutionalrightsandfreedoms:wouldn’t makingallpaymentstraceablegivethoseinpower the upper hand against their citizens? BU: Actually, I think countries with under-developed democracies could benefit from eliminating cash because that would be an effective way of combating corruption. Corruption holds democracy hostage, and it would be great to be able to dismantle cor- ruption by ensuring that funds earmarked for a particular purpose were in fact actually used for that purpose and didn’t disappear via corrupt channels. If all payments were traceable, things like passing money under the table just wouldn’t work anymore. That’s the sort of thing the Bill & Melinda Gates Foundation has realised when they advocate micro- payments and direct digital payments in the Third World. As long as you have a mobile phone, you can get around the dictators and corrupt officials. MJR: A while ago, a survey indicated that 45% of Swedes believe Sweden will go cashless within 20 years. What do you make of that? BU: I think those answers must be due to the way the question was formulated. In other words: “Do you believe Sweden will be cashless in 20 years’ time?” I would expect most people to say it will happen within five years. But I think 45% is rather low. MJR: Presumably that also means there are still quite a lot of Swedes today who don’t think Sweden will ever go cashless? BU: Yes, but it’s a matter of teaching and information. That information has to come from somewhere, and that’s why we’re sitting here today. You have to inform people and make them reflect on the fact that there’s really no reason to hold onto the payment system we have today. In practice, they’re already letting go, as they choose to use alternatives to cash more and more. MJR:Sowewanttoholdontosomethingalthough we don’t really know why, and in practice we’re rejecting the very thing we say we want to keep? BU: Yes, exactly. You’d hope the national banks would take the lead, so it’s completely incomprehensible why Sweden’s central bank, Riksbanken, has decided to issue a new series of notes from 2015. Who needs a 500 or 1000 kroner note? Only those who have something to hide. So we could start by taking the high-denomination notes out of circulation. MJR: The Serious Organised Crime Agency in the UK demonstrated a few years ago that 90% of all 500 euro notes in the UK were in the hands of organised crime… BU: Yes…that’ssomething I’d liketo askthe governor of Riksbanken directly: Why are you printing 1000 kroner notes when none of us need them? ▶ 19 Cashless society
  • 20. Yes to digitisation; no to nostalgia MJR: If you were to try to describe what’s hap- pened since 1976, when no one discussed the future of notes and coins, and you wrote the hit song “Money, Money, Money” – what sort of development and momentum have we seen in society since then? BU: Well, let me reveal that the song “Money, Money, Money” has absolutely nothing to do with money. It was just a sound I heard in my head. I had different lyrics in mind at first, but they didn’t sound right, and then the sound of “money, money, money…” came to mind, so I had to write the lyrics on that subject. But the sound came first, and there was absolutely no connection at that time with any thoughts of a cashless society. But apart from that, in answer to your question: there has been a massive shift to digitisation in society since the 1970s. MJR: And what do you mean by digitisation? BU: I mean the transition from analogue to the digits 0 and 1. And I experienced this transition in a very concrete way in the recording studio. In the early years, we recorded on analogue tape recorders, and we had a limited number of channels to work with. As I remember it, we recorded analogue up to and includingthelastLPwithABBA,butwhenweworked with Chess, we had bought digital equipment, so that’s when I had front-row seats to a very definite technological shift. But it happened in all sorts of areas of society in those years, and when you look back on it now, it’s been a revolution. MJR: Have you always embraced digitisation, or are you also critical of this development? BU: No, I’ve always embraced development and change, because when you can see it’s an improve- ment, there’s no need to get caught up with nostalgia. I don’t feel the least bit nostalgic about vinyl records, for example. I think it’s brilliant that music is so much more accessible today than it was before, via cyberspace. When you write music yourself, it’s as if you’re plucking ideas from a Platonic universe of ideas. Once a melody comes to you, you immediately feel it’s just so right that you think it must have existed out there somewhere beforehand, in this universe of ideas, or in cyberspace. And it’s rather like that for all of us today, now that all music is accessible via online services and streaming, etc. MJR: So you welcome services like Spotify and WiMP? BU: Yes, definitely. MJR: But isn’t there any downside to digitisation? BU: Nope… MJR: No…? BU: I don’t see any downside to digitisation. It makes everything easier and more efficient. MJR:Butwhataboutolderpeopleandothergroups of people who have difficulty using computers and online banking and smartphone, etc.? BU: Well, of course, we have to think of older people or people with special needs, but that doesn’t prevent us from reaping the benefits of digitisation at the same time. To me, these are two different things, but obviously we mustn’t leave people behind if they can’t keep up with developments; we need to help them, of course. It’s clear, too, that some groups in society may be concerned about the implications of doing away with cash because they feel more confident using cash than they do with digital pay- ment solutions, and they’re worried about how they would cope with new technologies, such as mobile payments. That’s why it’s vitally important to develop the new payment solutions intelligently so that no one is excluded; on the contrary, we need to make it easier for groups who are already struggling in various ways. These could be disabled people, or people with special needs, and technological solutions could be designed that are easy for them to use, too. ▶ 20 Digital values
  • 21. Björn Ulvaeus 21 Cashless society
  • 22. MJR: So the bottom line is that there’s no use standing still or going back? BU: Yes, and that doesn’t only apply to payments, but to new technologies in general. I’m fascinated by what’s been happening about energy these days, with solar power, geothermal energy and hydro-electric power. I’m involved in a project in my old home districtofVästervik,wherewe’rebuildingahotel,flats and restaurants completely from scratch, and they will be located close to the sea. I’m very interested in developments in things like solar power and how we could harness the latest technologies for our project. And that all links in with digitisation too. The other day, I bought the new Tesla sedan, and I think electric cars are the way forward. I’m not at all nostalgic about petrol stations or tankers on the roads. There’s nothing positive about those, and I look forward to seeing them disappear and being replaced by cleaner technologies. I think some people are mentally predisposed for a future-oriented, non-nostalgic view of life and the world, and I think I’m one of them. I’ve never looked back longingly to the time when I was on stage with ABBA, and thought how nice it was to be there, or wished I could turn the clock back – definitely not. MJR: But how can you say that now that you’ve got your own museum? Not many people get to have a museum about themselves – and certainly not in their own lifetime! Don’t you get nostalgic when you see the whole ABBA story unfolding before your very eyes? BU: No! And that was actually one of the reasons why I was able to get to grips with the project and help to construct the museum. I regard myself today as a different person from the guy in the silly costumes and platform boots, and the ABBA era feels like a long, long time ago. So today I’m able to tell the story of that time without a hint of nostalgia, and if I hadn’t been able to do that, it would have seemed very artificial and narcissistic to build a museum about yourself. MJR: But don’t you feel any tenderness towards the guy in the platform boots? BU: Yes, I do, in a way – great tenderness, but not nostalgia. MJR: When you chose to be actively involved in this ABBA The Museum project, you also made thedecisionthatitwouldbeacashlessmuseum… BU: Yes, and a lot of people were amazed and asked if that was really a good idea, because it would be sure to lead to lots of problems. Some people asked: “Do you really want to frighten away all the Russians with their bundles of notes?” But the truth is that we haven’t had any problems, because it turns out that most tourists actually have a payment card on them, even if they start off wanting to pay cash. And if that is a problem, people can always go into the restaurant next door and buy a cash card there. So we’ve left the back door open, in a way … Unacceptable black economy MJR: As a musician yourself and a firm advocate of a cashless Sweden, you must have given some thoughttowhatthemanystreetmusicianswould do in a cashless society if they could no longer earn their living just by passing the hat around? BU: Yes, exactly – what should we do about them? If society went cashless tomorrow, it would be difficult, but I’m sure the problem will resolve itself in the next few years with the many new payment systems on the way for smartphones and tablets, etc. Actual begging is worse; that would obviously be affected when cash is eliminated, but I think we If all payments were traceable, things like passing money under the table just wouldn’t work anymore. 22 Digital values
  • 23. have to acknowledge that the problem of begging isn’t about payments and payment technologies. That’s on a different level; it’s a social problem, and the way to eliminate it is to remove the causes of begging, not by developing payment technology. So begging doesn’t carry any weight as an argument against eliminating cash either, in the same way that the right to moonlight doesn’t. MJR: But cash is very important when it comes to moonlighting, isn’t it? And shouldn’t people be able to do a bit of work on the side? BU: Well, we’re assuming, of course, that all people are honest and pay their taxes, and so on. So the black economy, whether it’s “only” moonlighting or crime as such, can’t possibly be part of the argument for retaining cash. But it is an important element, of course, when we talk about the benefits of removing cash – that’s for sure. We need to develop solutions capable of ensuring that the revenues lost because of the black economy are returned to the treasury for the benefit of everyone in society. And removing cash can only help to accelerate that movement, in my opinion. Marginalised people in society will benefit the most from the additional resources that would be available if the black economy was reduced. MJR: If we give up notes and coins, aren’t we also givingtoomuchpowertothemajorcardorganisa- tions, for example, like Visa and MasterCard? BU: I reckon that if they don’t self-regulate, we’ll have to use legislation to ensure that they don’t charge excessive fees, etc., and that’s already happening now. But I believe competition will automatically make sure that those that charge excessive fees will fall by the wayside. The same applies to banks, of course. Banks and their charges are in the spotlight more than ever, and there are some organisations keeping a sharp eye on things like that; there’s also a lot of political awareness here. MJR:IfyouweretodescribeyourvisionforSweden, how would it look? BU: It’s a more honest, more transparent Sweden, whereconditionsaretoughfortheblackeconomy.I’m not saying we can eliminate all crime, and certainly not the sort of crime that goes on in the higher echelons, and that typically doesn’t even involve cash, but at street level, removing cash would make a difference. MJR: Shouldn’t there be more cooperation on this at Nordic level? BU: Yes, definitely. Our vision should be for a cash- less Scandinavia or a cashless Nordic Region. The Nordic Region needs to lead the way here, too, as we have done in many other areas. That’s my vision. It’s worth fighting for; it’s a matter of creating a better society and about setting a good example to the world. MJR: One last question, and it has absolutely nothing to do with notes and coins: When you want a great musical experience, what do you listen to? BU: When I settle down to listen to music actively, it’s usually a Beethoven symphony. It could be any of them, but my favourite symphonies are his first two. I often go for Mozart, too. But not ABBA … ha, ha… • 23 Cashless society
  • 24. The museum offers an interac- tive journey through one of the biggest success stories in music history. Here the visitor can get close to the band by experiencing whatit’sliketobethefifthmember of ABBA, get on stage together with the other members, enter the Polar studio, see what he or she looks like in ABBA’s legendary costumes, and much more. Agnetha Fältskog, Björn Ulvaeus, Benny Andersson and Anni-Frid Lyngstad tell their own personal ABBA stories through the museum’s audio guide, and ABBA The Museum aims to make its exhibits as interactive as possible. For example, there is a self-playing piano that is linked up to Benny’s studio. If the visitor is lucky, the red light will flash and the piano (Benny) will start playing while he or she is there. The group’s first major hit, “Ring Ring” from 1973, is celebrated by a red telephone in the exhibition. Only four people in the entire world have the phone number … Furthermore,ABBATheMuseumisperhapsthefirstcashlessmuseum in the world. The museum’s website says: “We have a vision of a cashless society. Therefore we don’t handle coins or bills.” During the first three months the museum had 170,000 visitors. • Source: www.abbathemuseum.com ABBA The Museum ABBA The Museum opened to the public on 7 May 2013 at the scenic Djurgården in Stockholm, Sweden. Image Anders Hanser ©Premium Rockshot 24 Digital values
  • 25. Nationalbanken (the Bank of Denmark) documented in its report The costs of payments in Denmark that the costs to society of a single cash payment in 2009 were DKK 7.36, whereas the costs of making a Dankort payment were just DKK 3.15. In other words a difference of as much as DKK 4.21 per payment.3 In Denmark, 786.3 million cash payments were made in physical shops in 2009.4 715 billion cash payments According to World Payments Report from 2011, in the EU and US combined,715billioncashpaymentsweremadein2009,corresponding to more than 80% of all payments made. The report points out that the potential for converting cash payments into card payments or mobile payments, for example, is especially great in relation to small payments, which account for the vast majority of payments – more than 80% of cash payments in the UK were less than £10 in 2009.1* The cashless church What will happen to church offerings if the cashlesssocietybecomesareality?Sweden’s answer is the “kollektomat” developed by Palatin Technologies AB and the Swedish Agency for Economic and Regional Growth together with representatives of the major Swedish religious denominations. The “kollektomat” is a self-service terminal that makes it possible to give financial offerings by payment card. The terminal is built into a wooden cabinet designed to blend in with the church interior. Churchgoers can use a touchscreen to designate the purpose of their offering, specify an amount and pay by card using their PIN code.6 Criminals prefer large banknotes In 2010, British bureaux de change were banned from sell- ing 500 euro notes in the United Kingdom. This was in response to a survey conducted by the Serious Organised Crime Agency which demonstrated that 90% of all 500 euro notes in the UK were in the hands of organised crime.2 The Rockwool Foundation esti- matesthatthetreasurywouldgain approximately DKK 8 billion if all moonlighting were eliminated in Denmark. In 2011, the Economic Councilestimatedthatmoonlight- ing in Denmark costs the state roughly DKK 29 billion in lost revenues.5 In brief … Image: ©iStock.com/LUCADP Image: ©iStock.com/LIGHTSTAR59 Image: kollektomat * Please find notes for this article at p. 74 25 Cashless society
  • 26. Cutting through complexity – reaching the next level of payment evolution Payment solutions today rest on the pillars of globalised card infra- structure and transfers using automated clearing houses. Will the information age with its technology-driven avalanche of innovative consumer offerings change this, or will consumers stick to banks as providers of payment instruments? The layers built on top of the foundation increase disintermedia- tion and often provide less transparency to the true funding source for the consumer – driven by a desire to ease the payment process and/or provide value-adding services on top of a basic transaction – but the core infrastructure remains the same, simply because of efficiency and ubiquity. The question whether new payment solutions will replace some of the current core elements such as a bank account, cards or cash, or continue to add functionality on top, is to large extent political, and indeed there is an outspoken demand for lower costs for pay- ment acceptance, though it is still expected to be provided by the financial sector. By embracing the mobile revolution and introducing the mobile wallet to their customers, banks empower the consumers by giving them full control of their payment options right at their fingertips. With these developments, and the apparent increase in digitised commerce, the financial sector will definitely simplify payments in the future, and the number of situations, where cash is needed will be fewer and fewer. Words Jørn Degn Hansen & Kristian Thure Sørensen, Nets images ©iStock.com/GETHIN LANE 26 Digital values
  • 27. The mechanics of consumer payments The need for exchanging valuables has always been an inherent part of human interaction. With the expansion of civilisations the concept of payment and the complexity and volume of payments have grown – similar to the spiral-shaped shell of the prehistoric ammonites – constantly evolving and adapting to the growth and building the complexity needed to fit for purpose. Payments have always been about receiving a service or an asset, and giving something back in exchange, but as civilisations evolved, simple bartering was insufficient and it became necessary to define value in a more abstract way, and to agree on a common reference in which we could trust, and to which any asset could be related. The invention of money was indeed brilliant – a structure enabling us to use the same method and instrument for payment, whatever item one wanted to purchase. Building layers It is important to realise that today’s payments rest on the simple exchange of valuables, but also to accept the fact that the structures we have built, since the first monetary systems were developed, constantly increase in complexity to fit for purpose. Trust remains a pivotal factor, and a necessary basis for all implementations of payments systems. Factors such as the need for security, accessibility and transaction speed have driven the development of payment infrastructures and introduced multiple peripheral solutions. Furthermore alongside with these developments complex regulation layers have been introduced to govern the ecosystem and ensure the trustworthiness. Banking has made it possible to combine safe keeping with high accessibility, and has centralised the transfer of funds to deal with security issues. Modern technical achievements have enabled the prevalence of global infrastructures such as VISA/ MasterCard, providing access to funds and facilitat- ing transactions directly at the point-of-purchase. In our present consumption-driven economy – based on growth and supply/demand in a global marketplace – the demand for speed, global acces- sibility and convenience have given new players outside the traditional financial infrastructures an ▶ 27 Cashless society
  • 28. opportunity to establish new products and services, on the surface offering convenience and ease of use, but still adding layers to the evolution spiral and increasingthecomplexityandspanofthevaluechain. At the same time, every single payment layer constantly needs to be adapted to meet current requirements in order to maintain validity and usability–thus,thedesignofbanknotesisrenewedto avoid counterfeiting, identity schemes are introduced to ensure authenticity and encryption ensure that transactions cannot be compromised – taking the entire evolution spiral to a new level. Payment superstructures The rate at which new consumer payment services is introduced is exponential. Before the 20th century, gold-based currencies in cash were dominant, but from 1900 to 1950, the first develop- ments of card payments took place. In the second half of the 20th century, the adoption rate of card based infrastructures grew dramatically, and the creation of a world-wide network provided the foundation for connecting local card schemes, enabling world-wide use. Today, rapidly growing e-commerce and use of mobile devices (laptops, tablets, phablets and smartphones), combined with the global reach of major card schemes, has fostered a huge number of innovative new ways to facilitate payments – BUT the vast majority simply provide services built on top of the globalised card infrastructure and do not constitute new payment infrastructures OR acceptance solutions by themselves. In essence, these solutions only add to existing platforms, having already established infrastructure as a prerequisite for operating, but creating value for users e.g. by freeing up valuable time to focus on commerce rather than the less exciting payment part of the process. So, what does this diversity mean for consumer payments and commerce in general? The answer is: less transparency - awareness of the true funding source often gets obscured by the layers built on top, which in general is accepted due to increased convenience and purpose-built functionality. The aim is often to lower payment barriers enabling a smoother sales process, yet it increases the disintermediation between the core source of funds and the consumers’ perception in the payment process. As a result, a number of payment superstructures have emerged, offering a different business model, e.g. using prepaid as the means to facilitate “simpler” payment experiences, and creating a consumer perception of a parallel banking experience for payments. Services allowing people to enrol a pay- ment card, and create transactions using a proxy (e.g. barcodes or RFID) are abundant, seemingly creating a new payment method, yet in fact paying tribute to the efficiency and market coverage of the existing infrastructure. For merchants, smarter, convenient, simpler and value-add are attributes that attract - however, the most important criteria for a payment solution to be widely adopted by merchants is ubiquity. The combination of innovation, standardisation and certainty of user adoption across markets is a strong investment rationale. Adding value? With the growth of digital services (online and mobile), convenience seems to be one of the main drivers of success. This feature is also a prerequisite for user uptake in the first place. While consum- ers have been increasingly well served in terms of convenience, they have shown very little willingness to pay for convenience directly. There are, however, ways to motivate consumers to pay for convenience in a more indirect manner. Onewaycanbebyreducingthequalityoftheproduct while increasing the convenience. Examples of this can be seen when people switch to streaming music services, where the convenience is higher but the quality lower than music distributed on CDs. Within financial services, it could be argued that some products like e-money are of lower quality than other electronic means of payment (less consumer protection, less flexibility etc.), but offer a more convenient user experience in certain settings - e.g. at festivals, where participants have topped up a “digital purse” to pay for beer and other expenses within a limited area for a limited time. Another way of paying for convenience is for the consumer to pay in the new “alternative currency” of information. The ability to exchange personal 28 Digital values
  • 29. information for services has seen explosive growth over the past years, with Google being the leader of this kind of business model. Theamountofinformationthattheusergenerates and is able to share (knowingly or unknowingly) is growing due to increased digitisation of services. This is leading to more options offering higher quality and greater convenience and hence an increase in the total value of the service, all fuelled by the added value of the information generated. But while this leverages the total value of the growing ecosystem, it is important to remember that the original assets – the money in the account – remain the same. That said – the consumer might find he or she derives additional benefits besides convenience through the digital channels when use and/or information are rewarded with special offers and discounts. The question is – how much value is it possible to generate on top of the basic commercial transaction of exchanging money for goods? Will it always be a win–win situation where consumers benefit from a high level of convenience, relevant offers and attractive discounts while at the same time giving sufficient benefit to the merchants or other commercial entities for them to sponsor the new layers and increased complexity in the ecosystem? The financial sector should strive to ensure that the development of the future payment solutions combines the desire for convenience with value for merchants while maintaining transparency of the underlying assets. A quantum leap may redefine the basis for evolution With the introduction of Internet commerce, the world has witnessed an explosive development of “digital payments” in the online universe – in part as existing payment instruments and schemes have been adapted to suit emerging needs, and in part as overlay services have bridged the gap to the real world and provided automated payments, invoicing and other solutions. With the introduction of online payments in physical stores, where stored card information is used via e.g. barcodes or facial recognition, we experience the trend of payments going full circle, merging into one single payment methodology regardless of context. It can be anticipated that regulatory adaptions will follow to align regulation with reality and reduce the differences between traditional “physical” payment instruments and their online manifestations, further fuelling the innovation engine. The question is whether new payment solutions will replace some of the current core elements such as a bank account, cards or cash, or add functionality on top. The increasingly outspoken market demand for lower costs of payment acceptance, and the intensified political debate regarding consumer costs, indicates that we are reach- ing a point of saturation beyond which complexity and costs will exceed the benefits of increased efficiency. As the main provider of pay- ment instruments connected to an account, banks are in a unique position to protect their role as the primary source for consumer payments, enabling their customers to pay directly from an account. The build-up to such a quantum leap is seen across markets, where banks provide the consumer with direct and easy access to perform ▶ 1900 1950 2000 Number of payments options Percentage beyond local reach The Internet-age surge in available payment solutions has generated a large quantity of services lacking the ubiquity of previous payment instruments, creating a never-before-seen diversity of payment options available – varying from one market to the other. (Not to scale, for illlustrative purpose only) 29 Cashless society
  • 30. With the expansion of civilisations the concept of payment and the complexity and volume of payments have grown – similar to the spiral-shaped shell of the prehistoric ammonites – constantly evolving and adapting to the growth and building the complexity needed to fit for purpose.
  • 31. person-to-person payments from mobile devices, with no need for a prepaid account, a card acceptance device or a home banking solution. For these services to cover the needs in a com- mercial setting, cross-border connectivity and standardised acceptance have to be in place. A new representation of the payment core can emerge, creating new opportunities for innovators to build convenient superstructures, - and most likely also significant challenges for others. A keyword to consider is standards. Banks are in a strong position to build on existing standards for processing transactions, whatever infrastructure is used. The necessary operational international forums are in place to agree on new acceptance standards, as is the legal competence needed to ensure long-term compliance with legislation. Empowering the consumer; clearing the way to future payments No contender is on the brink of world domi- nance – but some have created regimes within which a stronghold is certainly present, although at the cost of putting up walls to ensure control. The walled gardens of the mobile platforms are proof of how total control restricts ability to interact with outside stakeholders, and issuers as well as solution providers are forced to put a sign in the window stating “available on any platform”. Thus consumers have to make a choice, and they cannot be certain that they will have the complete set of options once they have made their choice – far from ideal, and an open invitation to create a more efficient setting for consumer payments. Organising payment services into a wallet is one step towards the desired end-state and in addition, developing the wallet to operate across platforms as well as to span physical and on-line commerce will provide the commerce transparency that many overlay services strive for. To release the wallet’s potential for full-scale consumer benefit enabling users to do more than card payments, standards for interactions will have to be described - e.g. redemption of points at any point of consumer contact, validating digital identity or standardised access to issue coupons to any wallet. Furthermore, adding the ability to control other items, and not only funds in the wallet, creates the true foundation for digitising the mechanics of payments, enabling a consumer to transfer non- monetary valuables in a transaction. The latest technical achievements allow for the development of a mobile instance of the wallet that will provide the platform for issuers to issue cards directly to a mobile device, empowering their customers to conduct commerce in any market accepting contactless payments, and, in future versions, to operate across physical and online commerce domains as well as managing valuables. A way of understanding the full potential of the wallet is to see it as not only a container of instru- ments and valuables but also a window to all the different layers, allowing an issuer to provide access not only to a bank account or payment card and other bank-issued services but to any other service relevant to the consumer e.g. loyalty cards, points, coupons, digital identity and other public services. Cashing out – effects on cash in circulation Having these payment capabilities right at your fingertips together with the apparent increase in digitised commerce will definitely simplify payments in the future, and the number of situations, where cash is needed will be fewer and fewer. The banks’ innovative person-to-person solutions are a clear example of how modern solutions provide an equal alternative to exchanging cash, and the more standardised and internationally available they get the more these solutions will make cash obsolete. For Merchants, the advantages of electronic payments over cash will become increasingly evident, as the potential of more intelligent value-adds get released in the coming years. The extent to which digitised payment solu- tions will replace cash depend upon more than just technology and smart payment instruments, but as far as consumers are concerned, security, convenience and globalised acceptance will be strong drivers towards a cashless society. • 31 Cashless society
  • 32. Replacing the leather wallet With smartphones being an integrated part of everyday life, it is only natural that commerce has taken a firm hold in the use of these devices. As smartphones gradually replace other devices like watches, calculators, newspapers, game consoles, etc., it is an obvious vision that the smartphone should also in time be able to replace the leather wallet. As payments are perhaps the most defining functionality of a wallet, this is where we have already seen most services launched on mobile devices. Most of these have been built as superstructures upon existing payment systems, where the service on the phone simply is an interface to another payment instrument. The next generation of mobile payments will reside on the phone or be tightly coupled to the phone. This development taps into the potential of integrating the smartphones into the existing payment infrastructure. The Nets suite of mobile services WORDS Jørn Degn Hansen & Kristian Thure Sørensen, Nets Nets is in the process of bringing to market a suite of mobile services that will allow banks and merchants to interact with consumers in new ways without having to replace current processes and systems. This will ensure the widest possible reach as well as the flexibility requested by issuers and consumers alike. The mobile wallet will support a wide array of content from loyalty and membership services to other types of financial services. 32 Digital values
  • 33. The real new feature of the mobile wallet compared to the physical wallet is not, as the name suggests, that it is mobile, but that it is connected. Towards increased simplicity It is important to note that the real new feature of the mobile wallet compared to the physical wallet is not, as the name suggests, that it is mobile, but that it is connected. This allows for online access to a series of other services and thus makes the smartphone a part of the financial services infra- structure. While the solutions are indeed complex from a technological point of view, this integration is actually a foundation for increased simplicity since it allows for easier access to and management of a consumer’s valuables. Nets’ mobile wallet platform At the centre of Nets’ mobile solutions suite is the Mobile Wallet Platform. This platform allows any issuer to design and brand a mobile wallet that fits his/her needs. At the same time, the flex- ibility of the platform allows any service provider to launch services across different issuers’ wallets (at the discretion of the individual wallet issuer), thus giving the end-user the same experience as with the leather wallet, where cards from a wide range of providers happily coexist. A variety of services One of the initial services delivered to the wallet will be card-based payments through mobile-issued payment cards from the existing schemes that tap into the existing acceptance infrastructure. Furthermore, the mobile wallet will support a wide array of content from loyalty and membership services to other types of financial services. This solution brings the benefit of scale and interoperability as well as providing the option for true differentiation. • 33 Cashless society
  • 34. The cashless society is the way ahead Words Torben E. Hoffmann Rosenstock, Chief Consultant at the Danish Chamber of Commerce image The Daily Telegraph Torben E. Hoffmann Rosenstock 34 Digital values 34
  • 35. Although many shops and customers like cash payments, the Danish Chamber of Commerce re­commends that shops should be allowed to decide for themselves whether they wish to accept cash or only cards, going forward. Many shops like accepting cash payments, and in fact probably only a minority of shops would consider it relevant to do away with cash as a means of payment. Too often, the cashless society is presented as an either–or situation, but it is important to strike a balance in this debate. There is thus no reason to believe any change in the law would result in cash-paying Denmark waking up to find most of the retail trade no longer accepting cash. People in the retail trade want to make money, and for the vast majority, the combination of cash andcardpaymentswillnodoubtbethepreferredway for many years to come. But that does not preclude paving the way for innovative new business models that could help to brand Denmark as a pioneering nation. However, this is contingent on our legislators having the appetite to blaze new trails. The Danish Chamber of Commerce welcomes the notion of challenging conventional means of payment with innovative new payment solutions based on consumer trends and existing technological facilities capable of supporting such a development. Thetrendhereisclear:DanesmainlypaybyDankort. Scarcely anyone will mourn the phasing out of cheques these days. If we had had the same discus- sion 20 years ago, the picture would presumably have been very different. We must look ahead and ensure there is always an incentive for developing new and better solutions. Cashless means better security too Today, in Denmark, only banks, unmanned filling stations and vending machines are exempt from the requirement to accept cash payments. For security reasons, therefore, more and more banks are choosing to reduce the number of branches which accept cash. Reducing the number of shop robberies would benefit society. With this in mind, there is a sur- prising lack of political will to consider legislation permitting those shops which may deem carrying cash too great a security risk to opt out of cash altogether, as they can in Sweden. Figures from CrimeStat, the retail trade’s crime mapping portal, shows that in the vast majority of cases, the robbers flee empty-handed or only gain limited funds in a robbery. Even if shops follow police advice to keep cash holdings to a minimum, some shops are uncomfortable with having cash in their tills knowing that robbers may be satisfied with even a limited amount of funds. Apartfromthesecurityaspect,itcanbeexpensive, time consuming and might involve a lot of admin- istrative hassle for shops to cash up and deposit the cash in the bank’s night safe. However, shops are not the only vulnerable targets when it comes to carrying cash; the same applies to ordinary people. Unlike those who prefer to have ready cash in their pockets, credit card holders benefit from an anti-fraud guarantee in case of theft. • 35 Cashless society
  • 36. Dansk Supermarked ready for contactless payments The Danish retail chain Dansk Supermarked is preparing for a future without cash. The first steps are the introduction of new terminals that will ultimately enable consumers to pay using contactless cards and mobile phones. D enmark’s largest retailer, Dansk Supermarked, has taken a major step towards the supermarket of tomorrow. As of 2014, all payment terminals in all 550 stores of the Danish chain will be contactless. This involves 4,500 terminals altogether. “Wearealreadybusyimplementingthenewterminals throughout Denmark, and everything is progressing according to plan. Stores that have already been fitted with the new terminals report great customer satisfaction, as customers find payments made using the new devices are faster, even though they still have to insert the chip into the terminal as yet,” according to Alan Jensen, IT director of Dansk Supermarked. Words Nina Faurby, RelationsPeople Images Morten fauerby Support for less cash Further down the line, contactless terminals will also enable the customer to complete a transaction just by placing a contactless payment card or a mobile phone on the terminal. Although no contactless pay- ment cards or payment tags for mobile phones have been issued in Denmark as yet, Dansk Supermarked already has high expectations for a future involving less cash. According to Alan Jensen, contactless terminals will benefit customers, employees and merchants alike: “We are extremely interested in creating cashless supermarkets, and this is one step in that direction, becauseweexpectmorepaymentsinvolvingsmallsums to switch to contactless cards and mobile phones. ▶ 36 Digital values
  • 37. About Dansk Supermarked Denmark’s largest retailer, Dansk Supermarked, operates the Føtex, Bilka, Netto and Salling chains, which have more than 1,300 stores across Denmark, Germany, Poland and Sweden. It has 550 stores in Denmark altogether. Dansk Supermarked employs a staff of approximately 32,000 in Denmark and a further 10,000 in Sweden, Germany and Poland. Dansk Supermarked is owned by A.P. Moller-Maersk and the F. Salling Group and has a turnover of approximately DKK 56 billion per year. Alan Jensen 3737
  • 38. As the proportion of digital payments increases, we’ll be able to save on the costs of handling cash. And at the same time, our employees will enjoy greater security, because cashless shops are quite simply less attractive to criminals. The new terminals will also enhance the customer experience in the shop because this makes payments quicker and easier,” Alan Jensen explains. He adds that the new contactless terminals are a great supplement to the initiatives that Dansk Supermarked has already put in place to reduce the costs of handling cash in the stores: “Counting the cash and transporting it to and from the bank is a major expense, generally speaking. So we’re already doing a lot to cut these costs, actually. For example, we’ve been using an internal cash management system for a number of years now which makes it possible for us to re-use the cash in-store instead of having to deliver it to the bank every day. With this in mind, contactless terminals are a natural next step for us.” Ready for the future – ahead of time! Contactlessterminalsalsocomplywiththestricter security requirements imposed by the international card companies MasterCard and Visa. Accordingly, given that Dansk Supermarked needed to replace most of its terminals anyway, it was only natural to take it a step further and adopt the new cashless technology: “It’s important for us to be ready for the future, so considering that we had to replace our terminals anyway, it made sense to go for contactless terminals straight away. That means we’re ready for the future before the future arrives!” Alan Jensen explains. Although Dansk Supermarked is replacing its terminals, Alan Jensen confirms that it will still be possible to pay for goods using conventional plastic cards without contactless technology: “We try to consider all our customers. I still believe we are a long way from a completely cashless supermarket, partly because there are still some legal barriers remaining, but this is a step in the right direction,” Alan Jensen comments. Dansk Supermarked expects to be able to save tens of millions of kroner each year by minimising the amount of cash in the shops. • 38 Digital values
  • 39. Travelling light One million British pounds in £20 notes weighs 50 kg, while the same amount in 500 euro notes weighs only 2.2 kg.4 From 2008 to 2013, there has been a 30% reduction in the use of cash as the means of payment for everyday groceries in Finland.2 The Danish Chamber of Com­ merce conducted a survey in 2011 which showed that 85% of Danes over the age of 17 are “willing to pay by card between 10 pm and 6 am to improve security in shops”.1* Dirty money Newanalyseshaveshown thatDanishbanknotesare contaminated with an average of 40,000 bac- teria, including staphy­ lococciandfaecalbacteria (E. coli).3 In Denmark, there are approximately 65 billion (2012) Danish kroner in circulation in the form of notes and coins; approxi- mately DKK 32 billion of these are issued as 1,000-kronernotes.Inother words there are approxi- matelyeight1,000-kroner notes per adult Dane.5 On average, the populations of countries such as Zambia, Zimbabwe, Rwanda, Tanzania, Malawi and Lesotho made less than one non- cash payment per person in 2009.7 In brief … EUR 84 billion in costs AccordingtothereportTheFuture ofCashandPaymentpublishedin 2010byRetailBankingResearch, cash accounted for 78% of all 388 billion payments received by European merchants in 2008, corresponding to 301 billion pay- ments. The report concluded that total costs of distribution, control,handling,processingand recirculation, etc., of cash was EUR84billion,equivalentto0.6% of Europe’s GDP or EUR 130 per European.6 Image: ©iStock.com/MALERAPASO Image: ©iStock.com/ANDYD * Please find notes for this article at p. 74 39 Cashless society
  • 40. Exporting the cashless society Cash and moonlighting Michael Juul Rugaard: How important is cash in terms of moonlighting and crime in our society? Kai A. Olsen: It’s very important. The advantage of cash is, of course, that it is anonymous. And for a large proportion of today’s fraud and crime, the anonymity provided by cash is vital. Although several links in the chain can be electronic, there is usually one link that requires cash. For instance, with falsified invoices, it is possible to cheat electronically too, but at some point or other, the money is changed into cash, because without this step, the authorities would be able to follow the money all the way through to the recipients. But cash breaks the electronic chain, and thus interrupts traceability, so the point is that if you take cash out of the equation – or even just high-denomination notes – that would make some criminal activity very difficult. At the same time almost all black-market labour would disappear. Of course, bartering can be untraceable, but then we’re back to the old-fashioned natural economy with the requirement for transactions to take place more or less simultaneously, the difficulty of ascertaining value, etc. In practice, this will only be an exception in a modern society. The Nordic countries are in a unique position to create the world’s first cashless region. It would save them billions of kroner, e.g. by reducing moonlighting, and could even be the start of a highly lucrative export adventure. Norwegian Professor Kai A. Olsen of Molde University College and the Department of Informatics, Uni- versity of Bergen, told us this in an interview with Digital Values. MJR: Looking initially just at working in the black market, is cash really necessary? If you want a new roof on your house, and the carpenter is willing to do it on the black market, can’t you just transfer the money from your account to his account? KAO: Yes, of course, but the transaction would be digital, and therefore traceable, so there is a risk that the authorities could discover the transac- tion. That could cost him dearly. Under Norwegian legislation, and I expect in most countries, anyone moonlighting is a criminal. As soon as they accept black-market payments digitally, they know they have crossed a line that can mean years in prison. Furthermore, you, as a customer, are also partially responsible for ensuring that the carpenter also pays his tax. In practice, the possibility of hiding an account-to-account transfer is far lower than when using cash. Once cash is taken out of the equation, you’re forced to take a stance. And I believe the majority will choose the honest stance and not risk being branded a criminal. There’s another point as well. Those who cheat on their taxes today can excuse themselves by saying other people are doing this too. In a society where most people pay their taxes, peer pressure can force all to pay their taxes. ▶ Words Michael Juul Rugaard, Nets Images Anders Hviid 40 Digital values
  • 41. If you take cash out of the equation – or even just high-denomination notes – that would make some criminal activity very difficult. Kai A. Olsen
  • 42. MJR: But there must be a triviality threshold for tax free payments? KAO: That’s an important point. Under certain amounts, and when it’s not a matter of a more systematic business, you should be able to pay electronically without the risk of being criminalised. It’s already the case that you can, within limits, make tax-free payments in Norway, and the same applies in Denmark, for small jobs like babysitting and cleaning in private homes. So, society is already operating with a triviality threshold. It is possible, however, that we will have to raise that threshold a little if we decide to remove cash altogether, just to avoid criminalising too many ordinary people and forcing the authorities to devote resources to utterly insignificant, petty things. However, as before, having the data does not necessary imply that the authorities will use these data. What we need to take an interest in is systematic moonlighting, and I submit that this would basically disappear if we did away with cash, or if we even did away with the highest denomination notes, which in Norway are 500 and 1,000 kroner notes. MJR: But wouldn’t that operation be more or less free to do? KAO: Yes, indeed. It’s not like putting a man on the moon; you don’t have to invest billions of kroner in advance without knowing whether the operation would succeed, or whether you’d ever get a return on your investment. You could take one step at a time, and you could always revert if you wanted to. You could opt to remove the 1,000 kroner note first and then wait two years and see how it turns out, before taking the next step and removing the 500 kroner note. MJR: But if Norway, Denmark and Sweden were to decide to do away with their kroner, wouldn’t we just see the black market continuing with euros and dollars instead? KAO: No, I don’t think so. For example, if I buy euros in Norway, at the bottom of my receipt is a note stating that information on my currency purchase is being forwarded to Norway’s central bank (Norges Bank). That is, I’m not anonymous when I buy foreign currency. And if I buy 100.000 euros or dollars to pay of my carpenter, I’d have difficulty explaining that. MJR: But couldn’t I just say I’ve gone on a long holiday? KAO: Yes, but it’s not difficult to check whether that story holds water, and it would just make things more convoluted. And what about the carpenter who would have to accept 100,000 in euros? How would he spend that money unless he was going on a long trip abroad himself? He would be forced to change the money back and put it into his account in order to be able to spend the money in Norway. As I said, I think that very few are willing to take the risk. While everybody can understand that payments in cash are close to risk-free, most will not sleep well at night knowing that all transactions In Norway alone we spend NOK 4 billion on handling cash. To me, this is absolutely unnecessary. 42 Digital values
  • 43. are traceable. So, moonlighting is appealing today because it’s easy, but if the risk increases, people will probably default to the side of honesty. Large savings potential MJR: But if it’s really so easy that all you’d need to do is to take the 1,000 kroner note and possibly the 500 kroner note out of circulation, what’s stopping us? KAO: As far as Norway is concerned, my explanation is that some bankers and perhaps especially bankers atNorgesBankareveryconservative.Further,Norges Bank, which of course issues bank notes today, may be afraid of relinquishing a key responsibility. But there is a strong pressure to remove the large domination notes. The Finance Sector Union in Norway is in the forefront. It wants to improve the security for its members. Without cash there will be fewer robberies. The Norwegian Hospitality Association (NHO Reiseliv) and others that have to competewithblackmarketbars,pubsandrestaurants are also applying pressure. Many businesses, both in Norway and Denmark, have decided not to accept cash – even though this is in violation with the law. MJR: Assuming it is possible to eliminate the black market by removing high-denomination notes – how much money would that save in Norway? KAO: First of all, the state income tax would increase substantially. Secondly, a reduction in moonlighting would serve an important moral function, especially in countries like the Nordic countries with high taxes, where people obviously regard it as demoralising if their fellow citizens avoid contributing to the community. A modern society cannot function if the black market gets out of hand. You can see that in countries such as Greece and Italy, where the black market and tax avoidance have strongly contributed to destroying the economy. Sothere’sthepotentialtosavebillionsinacountry like Norway? KAO: Yes, definitely – we are talking about large amounts. In Norway alone we spend NOK 4 bil- lion on handling cash. To me, this is absolutely unnecessary. We spend billions on building roads and bridges to make our infrastructure as effective as possible, but an effective payment infrastructure is actually just as important. And the advantage of moving from cash payments to digital payments is that we already have what we need, i.e. we don’t need to invest billions in building new “bridges” first. The Nordic Region already has an extremely efficient payment infrastructure, and this gives the Nordic countries a unique opportunity to take the next step along the path to full digitisation. MJR: Earlier this year, the Norwegian Hospitality Association published the report Et kontantfritt reiseliv (Cashless hospitality), and you were the main contributing writer. The Norwegian Hospitality Association is Norway’s largest organisation for the hospitality sector, and the report studies the question of whether the sector is ready to take cash out of the equation. What results did you arrive at in this study? KAO: When the Norwegian Hospitality Association chose to spend money on a study as extensive as this, it was because they represent the organised, profes- sional section of the hospitality sector in Norway. They are encountering unreasonable competition from the businesses that operate in the black market, playing by different rules, for example by paying staff with tax free cash and avoiding taxes and VAT. In a country like Norway, where we pay a high rate of income tax and 25% VAT, the unprofessional section gains a massive competitive advantage of perhaps 30–40%bycheating.Togettogripswiththeproblem, the Norwegian Hospitality Association wanted to study whether the solution might lie in completely eliminating anonymous means of payment – in other words, notes and coins – and instead using only traceable digital payment methods, such as payment cards and mobile payments. That was the remit, and the report documented that operating in the black market is a major problem in the hospitality sector, that eliminating cash ▶ 43 Cashless society
  • 44. would be a feasible solution, and that for many reasons, the professional section of the sector would welcome replacing cash with digital payments. Our study shows that both employers and staff in the professional section of the sector prefer payments by payment card, for example. One of the reasons for this is that hotel staff, for instance, would feel safer in their jobs. Last year, there were three hotel robberies in Oslo. These have a negative effect on staff all over Norway. We can all envisage the situation of a lone receptionist staffing a hotel desk at night, knowing that there is a lot of cash in the register. What is particularly noteworthy from the study is that, when we ask the staff questions about tips, they say “Yes, we get more tip when the guest pays with cash.” However, when we ask what form of payment they prefer, a large percentage answer “Digital”. That is, digital payments provide better control of the payments, so they do not come unpleasantly under suspicion if there are a lot of cash payments during the evening and they are unable to reconcile the till at cashing-up time. Cash and criminal activities MJR: If we switch our focus from moonlighting, in the sense of legitimate work but where people just don’t pay tax or VAT, and instead take a look at actual criminal activity, such as dealing drugs, trafficking, etc., what is the role of cash there? KAO: High-denomination notes are particularly important for facilitating smooth financial transac- tions in large swathes of the criminal underworld. If you have a large amount of money that you need to transport discreetly, then you’d obviously choose high-value notes that don’t take up too much room and don’t weigh very much. MJR: How would a criminal operate his business at street level in a country where his customers no longer have cash? KAO:Hecouldofcourseaccepteurosanddollars–as long as those exist! But as we talked about before, it would not be particularly straightforward or risk-free for customers to obtain foreign currency, especially in large quantities. It would not be impossible to operate as a criminal, but buying and selling drugs, prostitution, acting as a fence, etc., would be much more awkward without cash. Of course, not all crime would disappear just by eliminating cash. However, many criminal activities would become so much more difficult that this would have an impact. Today many criminals are coming to the wealthy Nordic countries from countries in Eastern Europe, for example. If we became a cashless zone, I believe we would find we were actually exporting criminals, simply because of the difficulty in operating without cash. 44 Digital values
  • 45. Aninterestingpointiswhattheauthoritiesshould do. If they arrest someone selling hash, should they avoid using payment information from his customers? Should they follow up on this and arrest the customers, or would buying hash have to be permissible? In other words, today, cash allows for grey areas between what is legal and what is illegal. If we take cash out of the equation, we might have to define the dividing lines more clearly. MJR:There’salotoftalkaboutbitcoins,anddon’t you see a risk that, if cash is eliminated, bitcoins will grow dramatically in scope and become the anonymous means of payment for the black market and criminal activity in the future? KAO: Bitcoins and other similar virtual curren- cies are interesting, but I regard these mainly as experiments, and for this reason, I do believe they will be accepted for the time being. If they do start to gain traction, I think that it would be in the interests of the authorities to put a stop to them. That could be done under existing legislation, as only the national banks are entitled to issue money. If bitcoins became widely used, the authorities could not possibly allow sections of the population to use virtual currencies to avoid paying their taxes to the community, with society missing out on a lot of tax revenue. In addition, bitcoins would presumably be the preferred means of payment for terrorists and criminals. As we saw with The Silk Road trading portal, which the FBI closed down recently, the authorities cannot accept currencies like these to operate. So I don’t see bitcoins as a credible threat, and there’s no reason to believe that efforts to make society cashless would be in vain just because of a phenomenon like bitcoins. But I don’t think we will ever reach that point. An important task for national banks is to ensure a stable currency. For Bitcoins there is no such institution, and we see the effects now – it is a highly unstable currency. It is therefore unsuitable for payments. MJR: What about criminal activity at the other end of the spectrum, such as when people send money to tax havens in the Cayman Islands, etc.? KAO: Obviously, a great deal of financial crime does not involve cash at all, but society has been focusing on this area internationally in recent years, and a lot has already been done to make it difficult for criminals to find secure tax havens for their money. Here, we see the same movement we talked about earlier: in future, the chances of being detected will be so great that most people will no longer want to run the risk. MJR: Are today’s payment systems good enough? KAO: Well, the survey we performed for the Norwegian Travel Association showed that many peoplewerenotcomfortablewithkeyinginPINcodes in crowded pubs and bars. But this doesn’t have to be the case. Mobile payments are part of the solution. Another part is to give the customer more control. For example, to “load” an amount onto the card that subsequently can be used PIN-free to specify ▶ Kai A. Olsen 45 Cashless society
  • 46. that the card can be used without PIN at the local grocer etc. Secure digitisation MJR: Saving billions by minimising moonlighting andcuttingcrimesoundspromising,butisn’tthere anything that worries you about a future without cash and the general digitisation of society? KAO: With my background in IT I am worried about security. We are already at the point where we have to rely on the digital systems. If they stop, society stops. The idea some have that cash can be used as backup if the systems fail, is rubbish. The relatively small amounts of cash society has today wouldn’t make much difference in that situation. And, of course, even if they had cash, banks could not offer it without access to their computer systems. What we need to do instead is to focus on ensur- ing that our digital systems are robust enough to withstand even critical and long-term crises. And I think we have an important job to do here. We need to mirror our security solutions on all critical systems, and the authorities need to insist on this. That is, we need a level of security corresponding to what we know from modern aircraft, where each engine runs on entirely separate systems, making it unlikely that both engines will fail at the same time. This is a much better solution than having a parachute under each seat, or to rely on cash if the digital systems fail. MJR: Fortunately, many critical systems today are already designed with a security solution mirror, such as the key payment infrastructure solutions in Denmark and Norway… KAO: Yes, that’s correct, but we need to ensure that all parts, not only the banking systems, such as the power grid and mobile networks have a similar high level of robustness. What we also need is to educate more experts in IT security. I usually explain this with an image: If you want to get to the top of a mountain, you only need to find one way up, but if you want to defend the top of the mountain, you have to know every possible way. In order to handle this complexity, we need to design university programmes to educate these experts. This should be done in cooperation with the industry. At the University of Bergen, we are currently contemplating designing such a Kai A. Olsen 46 Digital values
  • 47. programme, and, as far as I know, Denmark’s largest university, the University of Copenhagen, is close to becoming the first university in the world to offer a Master’s degree in IT security, risk assessment and management. Cashless as a business case MJR: But although you have these concerns, that doesn’t seem to stop you believing we should go digital all the way, does it? KAO: No. And looking again at the matter of cash, I believe that, if we in the Nordic Region decide to eliminate high-denomination notes and proceed towards a cashless society, then IT education and redundancy of security solutions are areas we need to focus on at the same time, both for the sake of our own security and because this could open up a new export market. If the Nordic countries manage to become the world’s first cashless region, and if we do it intel- ligently, we will have an opportunity to sell our technological solutions and our knowledge and expertise to the rest of the world. Everything from strategicadviceandpaymentinfrastructuretomobile payment solutions and payment terminals could be exported to the countries following on from us and wanting to tread the same path. MJR: So you believe the cashless society as such could become a future source of income? KAO: Earlier this year, a special issue of The Economist called the Nordic model “The next supermodel”, and we really are in a special position with the ability to go a long way. This is just perfect for the Nordic countries because we have such a great starting point. These are stable countries; we have a good IT infrastructure, a high level of education, a low crime rate, and we already have an amazingly efficient payment infrastructure – for example, our joint clearing of money between the banks. This is amazingly efficient compared to the US, for example, where transferring money from one bank to another is quite awkward. In my opinion, our efficient Nordic payment infrastructure is probably even more important than the infrastructure we have for traffic with roads and bridges etc. And if, within a decade, we decide to become cashless, we can set about it gradually and start earning money from Day One because we will gain higher tax revenues while at the same time we will be saving money on not having to produce cash and move it around. At the same time we will see that certain types of crimes disappear. So this project would not entail the major invest- ments or high risks associated with putting a man on the moon! This doesn’t need to cost us anything; it’s mainly a matter of a political decision, and once that decision has been made, and in ten years’ time we have achieved a cashless Nordic Region, we will have a great many unique skill-sets – because in the process we will have been working on developing attractive mobile solutions, exciting user interfaces, the world’s best security systems, and so on. We can export these to other countries which will no doubt want to take the same route sooner or later. ▶ What we are waiting for now is a political decision so we can take the next step. 47 Cashless society
  • 48. Next step recommendations MJR: If you were to advise the Nordic politicians about where to go from here, what would you recommend? KAO: In short, I see the cashless society as an enor- mously interesting business case, both for Norway and for the Nordic Region. What we are waiting for now is a political decision so we can take the next step. And if you ask me, I’d definitely recommend that the authorities take these three steps: 1. Do away with the 1,000 kroner note and preferably also the 500 kroner note. 2. Demand that the banks charge a fee for cash withdrawals. It doesn’t make sense for me to be able to withdraw cash free of charge when cash is one of the most expensive means of payment available. According to bankers, it costs between 50 and 100 kroner to complete a cash withdrawal in the bank. Banks know they can’t charge a fee for cash today because no fee transactions have been the conventional wisdom, so they send customers out to the cash machines instead. But cash machines are another expense that the banks would rather do without because they have to compete with Internet banks, for example, which don’t have any overheads for branches or cash machines. 3. Give shops the freedom to decide whether they want to accept cash. In Norway, the Norwegian HospitalityAssociationislobbyingthelegislators to repeal Section 38 of the Norwegian Act on Financial Contracts and Financial Assignments (“Finansavtaleloven”), which, like the Danish PaymentServicesAct(“Betalingstjenesteloven”), stipulates that shops cannot opt out of accepting cash payments. MJR: Do you use cash? KAO: No. For the last two years I have, also as an experiment, tried to avoid using cash. With a few exceptions, paying digitally has gone smoothly – independently of the transaction amount. I have bought an apple in a store for 4 kroner with my payment card, while at the same time using it for larger amounts. What is interesting to see is that many places, where I previously had to use cash, are now accepting electronic payments. For example, I usually had to put 50 kroner in an envelope for toll when going to my cabin. Now, there is an electronic solution. Since many no longer carry cash this is a natural development. We have already passed the turningpoint.Societywillbecomecashfree-whether we like it or not. • 48 Digital values
  • 49. It doesn’t make sense for me to be able to withdraw cash free of charge when cash is one of the most expensive means of payment available.
  • 50. Cashless shouldn’t equal helpless Words Nils Ragnar Løvhaug, Nucleus image ©iStock.com/VISUALGO Before the cashless society can be fully implemented, we have to make absolutely sure that all the systems and solutions meant to replace cash handling are workable and functioning for every group within the society. Some of these groups face particular challenges that need to be addressed and dealt with. 50 Digital values
  • 51. This is the clear recommendation from Sverre Fuglerud, advisor at The Norwegian Association of the Blind and Partially Sighted (NABP). The organisationhasseenseveralexamplesofnewsystems implemented too early, without sufficient quality assurance, making it harder to lead an independent everyday life for citizens like NABP members. “It is very easy to go wrong when you decide to make a comprehensive change too fast. In Norway, new automation for purchasing train, bus and tram tickets has made these very difficult to operate for our members in recent years – and even for big parts of the general public, like the elderly or dyslexics.Lately,newtouch-basedpaymentterminals at doctor’s offices are making it almost impossible for us to pay after a visit without asking for help.” “You can’t introduce new cashless systems if the solutions turn out to be unworkable for parts of society. A grown-up person really shouldn’t have to ask for help in order to carry out ordinary everyday operations like ordering and paying for services,” Fuglerud states. Common standards He points out, though, that the NABP isn’t neces- sarily opposed to a cashless society as such, as long as it’s not rushed into. There are systems already in placethatcouldformthebasisforworkablesolutions, and he is happy to share some thoughts on what functions are most important for his members. “I would say that a clear common standard is the most important thing. The payment terminals from Nets are very good in this context. Every terminal and place of payment should work by the same system, with a keyboard standard where letters and numbers are tangibly marked, always found at the same place, and with keys large enough to put your finger on. The keys should also give distinct resistance and a signal when pushed. This is especially important for the function keys.” Banknote development Fuglerud believes that if these common industry standards can be reached and implemented, less handling of cash could actually constitute a step forward for the blind and partially sighted, as coins andbanknotesarenotwithoutproblemsoftheirown. “This obviously varies a great deal from currency to currency, with some more difficult to handle and differentiate than others. In Norway, we are currently cooperating closely with The National Bank of Norway on the development of a new series of banknotes, which will be a lot easier to separate from each other, both visually and tangibly. We did the same some years ago with the introduction of new coins, and this has been very successful. The NABP are certainly interested in offering our advice on mutual beneficial solutions to other enterprises working within this area.” Changing attitudes Fuglerud believes attitudes towards this are changing, and with the legalisation about universal design about to be tightened furthered, he envisions an easier future for the members of the NABP. “In 20-30 years, people will shake their heads at the notion that we even allowed solutions that didn’t function for all groups of society. By 2021, all ATMs, ticket machines and payment terminals must be designed in order to be used by everyone. When these solutions are in place, I think the transition to a cashless society could start for real.” • Sverre Fuglerud 51 Cashless society
  • 52. Empowering people through digital payments The world’s poorest people are hugely dependent on cash. This contributes to keeping them in a vulnerable position. According to the Bill & Melinda Gates Foundation, financial inclusion and digital payments are part of the solution. S ome 2.5 billion adults, mainly from the world’s poorest countries, do not have access to ordinary financial services today. Generally speaking, cash is the basis of their finances. But cash entails a number of risks – for example, that everything you own can be stolen – and that helps keep people who are already marginalised in a position where even keeping a small amount of savings safe and secure can be extremely difficult. Less than one non-cash payment per year In its report Payment Systems Worldwide (2010)1* , The World Bank examined issues such as the number of non-cash payments made per capita in 120 coun- tries all over the world, and – unsurprisingly – the results show that for 2009, the year for which the figures were gathered, the countries with the most non-cash payments were rich countries with an advanced payment infrastructure. Far ahead in first place was Hong Kong with as many as 613.8 non-cash payments per capita in 2009. Norway was in second place, with 380.3 payments, followed by Finland with 370.2 payments, the US with 339.9, and Sweden with 306.0. Sub-Saharan African countries dominated the bottom end of the list. According to the report on avarage, the populations of countries such as Zambia, Zimbabwe, Rwanda, Tanzania, Malawi and Lesotho made less than one non-cash payment per person in 2009. Mobile payments in Africa These countries, but also many others on the list, are thus hugely dependent on cash, and it is no wonder that text-message-based mobile payment solutions have enjoyed great success in recent years in parts of Africa, for example. Kenya’s M-Pesa (pesa means money in Swahili) was launched by Safaricom in 2007 and now has more than 17 million Words Michael juul rugaard, nets Images getty images ©iStock.com/PETER VIISIMAA * Please find notes for this article at p. 75 52 Digital values
  • 53. subscribers in Kenya and 5 million in Tanzania, and has also become established in countries including South Africa, Egypt, Afghanistan and India (under the name of M-Paisa). This makes M-Pesa the world’s most popular mobile payment system right now. In Nigeria, which had only 25 million bank accounts for a population of 167 million in 20122 , creative Nigerians – even before the launch of M-Pesa in Kenya in 2007 – came up with the idea of using mobile phones for transferring money by accepting and selling on talk time.3 Since then, the Central Bank of Nigeria (CBN) has taken the initiative for an ambitious national project intended to pave the way for mobile payment solutions in Nigeria and to reduce the use of cash. The project began in 2012 with a pilot scheme in the capital, Lagos, and CBN publishedadvertisementsfortheproject,forexample, explaining the infrastructure challenges Nigeria faces, but at the same time encouraging the country not to be deterred but to deal with the problems as they arise: “The basic point is that our infrastructure is not perfect – but even within the constraints, we can still make significant progress. The idea is not to wait to have the perfect infrastructure – but to be creative with what we have, while we identify and work on the various things we are going to address the current infrastructure gap… Cash-less Lagos – Let’s go!!!”4 The fact that the Central Bank of Nigeria is redoubling its efforts to reduce the use of cash is made clear in a new “Cash Policy”, which came into effect in Spring 2012, and which imposes a fee on ordinary Nigerians as well as businesses for withdrawing cash above a certain amount.5 Has Kenya eliminated cash? A lot of very good initiatives can be cited, espe- cially in Africa, and at times you get the impression that the success M-Pesa and similar mobile payment solutions have achieved in record time is on the verge of eliminating cash on that continent. In summer 2011, CGAP – The Consultative Group to Assist the Poor – conducted an extensive survey in M-Pesa’s homeland, Kenya, which showed, unfortunately, that that is far from being the case – even though the new solutions are an important step for a country with a weak payment infrastructure. CGAP surveyed 3,489 urban merchants and busi- nesses as well as 773 rural merchants and businesses in Kenya, and the result was very clear: cash remains the all-pervasive form of payment: “We discovered that, despite Kenya’s reputation for being a leader in mobile money, cash is still king. As shown in Chart 1 [see Figure 1], 99% of all retail transactions we captured were done in cash, with most of the remainder done through informal credit arrangements. In contrast, the Payment Council in the UK reports that 59% of consumer transac- tions were done in cash and accounted for less than one-third of transaction values. However, this does not mean that electronic payment is not available from some merchants. Our census data indicated that 18% of retail merchants accept mobile money, while about half will provide short-term credit for goods”.6 ▶ We discovered that, despite Kenya’s reputation for being a leader in mobile money, cash is still king. 53 Cashless society
  • 54. CGAP’s conclusion concurs with the World Bank’s figures from 2009 and confirms that sub- Saharan Africa, among other regions, remains highly dependent on cash. Grounds for optimism That said, there is no doubt that mobile pay- ment solutions such as M-Pesa, which enable users who do not have an ordinary bank account to pay, send and receive money, do make a difference in several African countries today. In another survey, also from 2011, conducted by Gallup on behalf of The Global Findex, backed by The World Bank and the Bill & MelindaGatesFoundation,35,000 interviews took place in 37 sub- Saharan African countries.8 The survey showed that just 24% of adult Africans had an account with a “formal financial institution” (in Central Africa, the figure was just 11%; in South Africa, it was 51%, and in several countries the figure was less than 5%). Altogether, approximately 400 million adults in sub-Saharan Africa did not have a bank account. Although the vast majority therefore do not have access to formal services, the study found that 16% of sub-Saharan African adults had used a mobile phone to pay bills or send or receive money within the past year. In Kenya, the figure was as high as 68%: “Many mobile money users are not otherwise includedintheformalfinancialsystem.InKenya43% of adults who report having used mobile money in the past 12 months do not have a formal account.” 9 Financial inclusion and digital payments For the millions of the world’s poorest people who currently have to base their finances exclusively on cash, a key prerequisite for making their financial situation more secure and stable is financial inclusion – i.e. cheap and easy access to basic digital financial services. At least, that is the starting point of a new initiative – The Better Than Cash Alliance – backed by The Bill & Melinda Gates Foundation together with players including UNCDF, USAID and Visa. In a speech at the United Nations Headquarters in New York, Bill Gates said: “One key innovation which I believe has as much potential to transform the lives of the poor as a new vaccine or yielding crop, is digital payments. Digital payments give the poor a foothold [to escape poverty] by freeing them from one of their biggest obstacles to financial security: cash.”10 The Better Than Cash Alliance has set itself the following three ambitious goals for 2017: 1. Significant commitments by governments, the development community, non-governmental organisations, and the private sector to imple- ment electronic payment solutions instead of cash. 2. Delivery of demand-driven technical assistance to governments, non-governmental organisa- tions, the development community, or members of the private sector that will dramatically increase the capacity of these stakeholders to deliver end-user-focused payment technologies. 3. Improved economic security for millions of low-income and poor people, many of whom were previously unbanked, enabling them to use bank or electronic accounts to build savings and assets via innovative payment technologies.11 • 0% 20% 40% 60% 80% 100% Cash Cards Mobile Money Credit Bank Check Hire purchase or layaway PAYMENTS IN KENYA URBAN RURAL Figur 1: payments in kenya7 54 Digital values
  • 55. One key innovation which I believe has as much potential to transform the lives of the poor as a new vaccine or yielding crop, is digital payments. — Bill Gates
  • 56. 72% 28% SWEDEN 23% 77% DENMARK SHARE OF PAYMENTS MADE IN THE NORDIC REGION 25% 75% NORWAY FINLAND 34% 66% 27% 73% 50% 50% AGEANDGENDER 60+ 29% 15-19 8% 20-29 16% CASH CARD CASH CASH CASH CASH CARD CARD CARD CARD 30-39 15% 40-49 17% 50-59 16%
  • 57. A brand new survey conducted by Wilke in Denmark, Finland, Nor- way and Sweden shows that a weekday without cash is fine for 57% of Nordic consumers, and that 16% would be perfectly fine with a cashless society. Still, most agree that access to paying in cash is a right everyone should have. Perceived convenience and habits are the main drivers for using cash. Nordic cash survey Words Frode Riis Andersen, Nets image shutterstock/ Tuomas Lehtinen T he survey shows that the share of cash use is just 27% in the Nordic region, so overall the market is evolving in the right direction - towards digitisation. By splitting the share in age groups, we find large differences on cash use. While the share of cash use among consumers aged 30-39 is just 15%, the share is as high as 29% among seniors over 60. Looking at differences between the Nordic countries, Danes are the most cashless-friendly, while the Finns seem to be more traditional. Indications show lower cash dependency Overall, less than half of the Nordic consumers (45%) “always/ nearly always” carry cash on a daily basis. As many as 29.2% never or hardly ever carry cash on a daily basis. The difference between how much money consumers think they have in their wallet, and the amount they actually carry around, varies quite a lot (they carry more money than they expect). This could indicate a lower dependence on cash than consumers normally assess. Cash is perceived as a necessity, but consumers have no sense of how much cash they actually have. This is especially the case among the younger consumers. The older the consumer, the more conscious they are about how much cash they carry around. ▶
  • 58. To keep or not to keep cash Although most customers argue that shops should be obligated to accept cash, a weekday without cash is not perceived as a problem. On the one hand, the Nordic consumers believe that access to paying in cash anywhere is a right everyone should have, and cash should therefore be retained. But on the other hand many consumers try to avoid using cash. Thus there appears to be a mismatch, which might best be explained by the fact that many retain cash because of tradition and habit, and because we ultimately have the experience that notes and coins are more concrete and more "real money" than the digital alternatives. This is further substantiated by the fact that cash, overall, is perceived as the most expensive payment method in regard to society. Cash use follows paying situation When consumers are asked where to still keep cash as a forced payment alternative, the opinions varies a lot. While many want to keep cash in post offices/banks, public transportation and grocery shops, very few see the necessity to keep cash at restaurants or in clothes shops. When asking consumers where they recently used cash, the answers are perfectly matching the opinions on where to keep cash. Main barriers for a cashless society Cash is particularly used for buying groceries. Convenience is the main reason for paying in cash. It is perceived as quicker and comprises a habit and tradition. Though a fair share of consum- ers also use cash, because they couldn´t pay in any other way or simply to get rid of it. The fact that consumers use cash to get rid of it or in situations where there is no alternative payment method is not a consumer-based problem. The challenge is to convince Nordic consumers that it is just as easy (or easier) and cheaper to use digital payment methods. Across a number of factors, the barriers toward a cashless society seem to increase with age. Age influences factors like whether or not consumers carry cash on a daily basis, the amount of money they expect - and actually have - in their wallet, and to which extent they find that shops should be obligated to accept cash. • Nordic consumers believe that access to paying in cash anywhere is a right everyone should have, and cash should therefore be retained. But on the other hand many consumers try to avoid using cash. 58 Digital values
  • 59. NORDIC DENMARK SWEDEN NORWAY FINLAND DENMARK SWEDEN NORWAY FINLAND 1. IT IS QUICKER 3. TO GET RID OF IT 2. COULDN’T PAY IN ANY OTHER WAY 4. OTHER NORDIC TOP REASONS TO PAY WITH CASH TOP SITUATIONS TO PAY WITH CASH 32%25% 22%21% 1. GROCERIES 3. PETRO/KIOSK 2. PARKING 4. ABROAD 5. RESTAURANTS 6. OTHER 37%
  • 60. If a country wants to realise the vision of a cashless society, at least three basic conditions would need to be met: • A well-developed payment infrastructure Those countries in the world that have currently made the most progress towards reducing the use of cash are also the ones that have built the most well-developed payment infrastructures over the years. These payment infrastructures will make it possible for those countries at some point to do away with cash altogether and to reap the benefits primarily in the form of financial savings, combating moonlighting, reducing crime, reducing environmental impact, etc. • Mature, inexpensive technology options The Nordic countries are among those today that would not face any insurmountable technological barriers if the decision was made to phase out cash and allow digital payment solutions to take over. But the same goes for a number of other countries in- and outside Europe. • Effective security systems Several countries have already passed the tipping point so that it no longer makes sense to regard cash as an effective safety net in case electronic payment systems fail for an extended period; instead, they should focus on ensuring that their digital payment systems comply with the latest security standards, and that they are capable of functioning even during disasters of some considerable duration. What exactly can we do? Even in the most digitised countries that basi- cally meet these three conditions, an active effort is required to progress the development away from cash. The following areexamples of specific initiatives that could be selected for implementation: • Eliminate high-denomination notes An obvious first step in the direction of eliminat- ing cash would be to take the high-denomination notes out of circulation. This would require a courageous political decision, but on the other Let’s cash in on digitisation Let there be no mistake: Nets has a financial interest in converting cash payments into digital payments, and at Nets we support developments in the direction of a cashless society. The great thing is that society as a whole also has a financial – but not only a financial – interest in replacing notes and coins with digital payment solutions. Words Mette Kamsvåg, Nets image ©iStock.com/JENS GADE NETS’ VIEW: 60 Digital values
  • 61. hand, the arguments in favour of this initiative are plain, as it would go a long way to strength- ening society’s battle with moonlighting and crime. Canada stopped issuing the CAD 1,000 note back in the year 2000 as part of the fight against money laundering and organised crime. Two years later, EU started issuing one of the highest denominations ever, the 500 euro note, and in 2011 approximately 600 million 500 euro banknotes were in circulation in the Eurozone despite the fact that such a high-denomination banknote is inconvenient as a medium for day- to-day payments and risky to carry around. • Freedom to say no In countries such as Denmark and Norway, current legislation constitutes the biggest bar- rier to enabling physical shops to go cashless. Section 56 of the Danish Payment Services Act (Betalingstjenesteloven) and Section 38 of the Norwegian Act on Financial Contracts and Financial Assignments (Finansavtaleloven) currently prohibit merchants from refusing to accept cash. There is no such barrier in countries such as Sweden and Finland, however. • Charging for cash Today, the high costs that are associated with cash are invisible to consumers, who perceive cash as the free alternative to fees attached to electronic methods of payment – such as credit cards. A natural next step could be to make the real costs visible and to charge for cash, either by applying a fee for cash payments or by charging for cash withdrawals at ATMs, or both. Norway’s central bank, Norges Bank, for example, has previously argued in favour of this option, although in practice no such charges resulted.1* • Prohibit large cash purchases In the last couple of years we have seen a wave of initiatives in several European countries – also among those who are most dependent on cash – whichhaveledtobansagainsttheuseofcashwhen buyinggoodsoveracertainamount.Thisappliesto▶ * Please find notes for this article at p. 76 61
  • 62. Italy,amongothers,whoinDecember2011under Prime Minister Mario Monti introduced a limit for cash payments of EUR 1,0002 . Corresponding limitations have been introduced in countries such as Spain (EUR 2,500), France (EUR 3,000), Belgium (EUR 5,000) and Denmark (since 2012, joint and several liability has applied to cash purchases of goods to the value of DKK 10,000 or more). These restrictions could be tightened even further. • New small change solutions A crucial factor in doing away with the many thousands of tonnes of coins in society is the need for user-friendly, inexpensive and stable digital alternatives. Therefore, there is a need to support innovative payment solutions intended spe- cifically for payment for small change transactions. This couldbeachievedvia small change cards possibly both as a plastic version and asadigitalmethodof payment in a mobile wallet. • Cross-border network A number of countries are already moving in essentially the same direction when it comes to the role of cash and new payment solutions in society. However, there are differences in experi- ence, focus, pace, etc., so it could presumably be useful to establish a cross-border network for the purpose of benchmarking. • Real-time payments The introduction of real-time payment infra- structure will be a big leap ahead to make dig- ital payment the preferred payment method. Innovation in real-time payments will limit the need for cash. Ultimately a political decision is required when it comes to the matter of starting to phase out the cash system in favour of a fully digital system. Need for political will We have referred to the three basic prerequisites for a cashless society. However, a fourth and perhaps even more important prerequisite is for key players such as the national banks and those in political office to make the decision to start phasing out cash. The national banks are at the heart of the matter, of course, because they are responsible for supplying their respective countries with notes and coins, and it seems evident that the holders of political office will listen closely to what the national banks have to say here. But whatever the national bank’s approach to the future of payments, ultimately a political decision is required when it comes to the matter of starting to phase out the cash system in favour of a fully digital system. Such a deci- sionwouldnodoubt encounter imme- diate resistance from several sides, and considerable political courage would be required to push it through. For this reason, we are unlikely to see a single, comprehensive decision. We are more likely to see a process spanning several phases, beginning with some specific initiatives as referred to above, such as eliminating the high denomination notes. Nets is in no doubt that the future belongs to digital payments, and that the final countdown for cash in our part of the world has got off to a small start already. The only question is: how long will it take before we make a more specific decision to “cash in” on the potential financial, social and environmental benefits of replacing notes and cash with digital methods of payment? • 62 Digital values
  • 63. Mette Kamsvåg, CEO Nets
  • 64. Need help making cashless a reality? Digital information
  • 65. Nets has been in the forefront of developing a cashless economy in the Nordic region for more than 40 years, a region that is recognised as the world’s most technologically advanced. We have a unique experience and competence enabling a cashless economy, and now we want to offer the rest of Europe the same opportunity. Our market leading strategic consulting service, supported by one of Europe’s most extensive product portfolios, can help you develop a payment system for the future. Where other companies concentrate only on digital money transactions we safeguard all aspects of digital value transactions within money, identities and information. In order to realise a cashless economy, different factors as digital signing, e-invoicing and mobile payment solutions are crucial parts of our offering. Digital money Digital identity
  • 66. N ew technology offers new opportuni- ties to simplify everyday payments. With contactless solutions, which are gaining momentum in a number of European countries, consumers do not need to use cash or put a card in a terminal and enter a PIN code for small transactions. A quick tap on the terminal with their card or mobile phone registers the purchase – quickly, securely and efficiently. “We’re convinced this ‘electronic wallet’ is the payment method of the future for small purchase transactions. A future where, for example, you land at Heathrow in London, take the Heathrow Express into the city and then buy a beer in the local pub – just by a few taps on your mobile phone. I believe 2014 and 2015 will be pivotal years in the move from current payment methods to contactless,” says Karl-Richard Floer, Director of Cards and Payments at Eika Kredittbank. Local pilot project Eika Kredittbank is part of the Eika financial services group, which is owned by OBOS (the larg- est Nordic cooperative building association) and 79 local banks in Norway. That makes them the third-largest banking group in Norway, and they have been working on implementing contactless solutions for the last three-and-a-half years. Nets has assisted them on their journey with product set-up and certification of the product with Visa. The local connection gave the bank a unique opportunity to launch a special pilot project. “We chose the little village of Geilo and its local Skue Sparebank (formerly Hol Sparebank and Nes Prestegjelds Sparebank) as the beacon for our test, and we involved the entire village in the pilot scheme. All the merchants and all the bank’s credit card customers were invited to test our contactless payment solution, and the feedback has been very Towards the electronic wallet New contactless payment solutions using a card or mobile phone offer obvious advantages for banks, merchants and consumers alike: faster, cheaper and simpler transactions with less cash and greater security. Now it is a matter of getting the whole value chain to see the utility value of pulling in the same direction, according to Karl- Richard Floer, Director of Cards and Payments at Eika Kredittbank, one of the first banks to implement these solutions in Norway. Words Nils Ragnar Løvhaug, Nucleus image Morten Brakestad Karl-Richard Floer 66 Digital values
  • 67. positive. Merchants and consumers want this, but we soon realised we would have to bring these solutions across from credit cards to debit cards to boost the volume of the transactions. These are the cards people mostly use for minor purchases. So we’ve now entered a new test phase, bringing in even more of Norway’s local banks. By the middle of 2014, we hope to have 50,000 debit cards and 10,000 credit cards equipped for contactless payment out in the market,” Floer explains. Starting with cards Eika Kredittbank has deliberately chosen to start with card-based solutions because this shortens the learning curve for consumers. However, they are also busy putting in place the infrastructure for and testing mobile phone based contactless solutions and are in close dialogue with the telecom sector in this work. “We must quickly move across to mobile phones – people will use their mobiles to make payments, ▶ New solution may be launched in 2014 Nets and Eika Kredittbank are currently working on a pilot project with a view to introducing contactless payment solutions that use smartphones during 2014. “The purpose of the pilot project is to identify areas of agreement and to describe how to put payment cards and credit cards inside smartphones. If we proceed, we will start by working to create an infrastructure for our future payment solutions using smartphones. We expect to have a pilot project ready in the market during 2014,” according to Karl-Richard Floer. “Nets’ strength is their ability to handle transactions and payment infrastructure, and it is positioned close to the end-user. They have long been a reliable business partner to us for payment solutions, so it is only natural for us to see whether Nets is able to offer a competitive solution now that we are looking to introduce an electronic wallet for our customers,” he continues. An open, flexible solution The intended solution is based on a Trusted Service Manager (TSM) and a Mobile Wallet. The Wallet will enable contact- less payments to be made using payment cards or member- ship/loyalty cards stored electronically in the wallet. In the future, consumers will not need to carry a physical wallet but will be able to pay using a smartphone, and will still have the benefit of all their existing customer loyalty concepts. The TSM part of the solution will be generic, and will be open to all issuers that want access to secure, effective handling of means of payment using smartphones. The platform enables issuers to create and design a customised solution to suit their customers. 67 Cashless society
  • 68. going forward. We believe the key to success is to start with cards so that customers can see how things work in the contactless world and get used to that. But mobiles present new challenges which still need to be dealt with. What happens, for example, when customers upgrade or lose their mobile phone?” Young people at the forefront The Nordic countries are usually at the cutting edge of implementing new payment solutions, but this is not the case with contactless. Countries such as Poland, Turkey and the United Kingdom already have a widespread adoption of contactless solutions. However the gap is not hard to close in the Nordic region, as many minor transactions are already completed using payment cards. “The fact that we’re accustomed to paying by card rather than in cash is an advantage here – lots of people pay for newspapers and soft drinks by card. We’ve also come a long way in terms of innovative, modern mobile solutions. I believe this will make contactless easier to implement, and young people especially will be quick to adopt this. They’re already living in the digital world and paying small amounts by card. And where some lead the way, others will follow. Then it will be important for banks and merchants to position themselves ready to deal with future payment structures, and to appear innovative and up to date.” Joint solutions Floer is concerned that, if contactless is to succeed, the solutions will need to be user-friendly, secure and non-proprietary. That means the mobile apps being developed must be usable with cards issued by any bank at all, just as customers make their own decisions about which cards they want to carry around. “The whole value chain needs to work together to create joint, unified and supplier-independent solutions that make it easy for users to link into and out of the infrastructure. Proprietary solutions would make operation, maintenance and further development more difficult. Basically, we have to make things easy for the end-user. We’re already seeing major players, such as grocery chains, getting ready for new solutions. But some will always trail behind – it was the same when we made the transi- tion from cheque books to ATMs. I really wouldn’t have dared to be among them,” Karl-Richard Floer concludes. • This is how it works • The technology used for mobile contactless payments is called NFC. Both contactless and mobile contactless payments (NFC) specialised forms of RFID. • In a contactless transaction, the payment terminal will search for a contactless card or mobile phone within a range of approx. 4 cm. A chip in the card/mobile phone communicates with the corresponding chip in the pay- ment terminal. • For every payment made, or when the total amount exceeds a predefined limit (e.g. NOK 200), the consumer has to provide authentication via a PIN code. The consu­mer also has the option of making the use of PIN mandatory for any purchase amount, if he or she chooses so. 68 Digital values
  • 69. We must quickly move across to mobile phones – people will use their mobiles to make payments, going forward.
  • 70. New payment trends in Finland A ccording to a study by the Federation of Finnish Financial Services, more than two-thirds of Finns pay for super­market grocery shopping by card, and less than one-third use cash.1* The Ministry of Employment and the Economy’s initiatives include setting a maxi- mum limit for cash payments, similar to the ones introduced in Spain, Greece, France and Belgium. In Spain, the maximum limit for cash payments is EUR 2,500 and in France the limit is EUR 3,000. In Italy, payment by card must be an option for purchases over EUR 50. A more interesting reform that the Ministry proposes is to make it mandatory for merchants to offer an electronic payment option even with smaller purchases. The aim of the new plans is to fight the grey economy: hidden income continues to be a problem, e.g. with restaurants and hairdressers, even though card usage in Finland generally is very widespread. The Ministry organised a web survey to research public opinion about limitation of cash payments. The aim of the survey was to find out whether there should be a law to determine when cash payments are allowed and whether the merchant should be obliged to accept card payment or another electronic payment method if the customer so desires. The Ministry also wanted to find out whether there are other means of reducing the use of cash; whether there are alternatives to cash other than cards; and how limitation of cash would affect industries using cash payments a lot. The survey results have not yet been published. New laws will be in force in 2014 at the earliest. The Ministry of Employment and the Economy in Finland have set up a working group to find ways to reduce the use of cash in the Finnish economy. The connection between cash and the grey economy has been highlighted as a primary reason for the potential reforms. Words Merja Lankinen, Nets * Please find notes for this article at p. 76 70 Digital values
  • 71. The eliminating of the grey economy The connection between cash and the grey economy has been highlighted as a primary reason for the potential reforms, and the prevention of the grey economy is one of the Government’s key objectives. This involves a programme of extensive co-operation with various government agencies, including the Ministry of Employment and the Economy, the Ministry of Justice, the Ministry of Finance and the Tax Administration. The eliminating of the grey economy supports legitimate business enterprises, ensures fair competi- tion and boosts employment, but also brings the Government more tax revenue. The programme will aim at an increase of EUR 300–400 million in annual taxes and social security contributions.2 TheGovernment’sprogrammefortheeliminating of the grey economy includes a total of 22 projects. By implementing these projects, the Government hopes to reduce the opportunities for crime, increase the risk of being caught and make the authorities more responsive in the detection of the grey economy. The legislative changes also highlight the responsibility of companies in the fight against the grey economy by encouraging companies to choose reliable and responsible partners.3 It should become easier for companies to obtain more information about their suppliers and subcontractors. The merchant will be obliged to provide a receipt to the customer if a payment is made in cash. The law on the obligation to provide a receipt came into force on 1 January 2014. Other projects will focus on issues like a requirement for accountants to report a suspected crime, a requirement for the employer to pay the employee’s salary to a bank account, a limitation on the use of cash, and the promotion of electronic payments.4 Are we ready for a cashless society? Finnish consumers prefer using cards as a payment method. The use of cash has declined significantly over the past two decades. According to the Federation of Finnish Financial Services, in 2013 26% of consumers preferred cash as the payment method on daily basis. In 1999, the cor- responding figure was 71%.5 And, a few years ago, several companies and municipal offices decided to abandon the use of cash. One example of a cashless experiment is the National Land Survey of Finland, which decided to try out cashless payments in two of its customer service offices in North Karelia for a period of 4 months (January–April 2013). The reason for aban- doning cash was to save costs. Cash caused extra work when cash deposits needed to be banked once or twice a day (a total of 730 times a year). The trial was successful and led to the abandonment of cash permanently, not only in North Karelia but also in the National Land Survey offices in Central Finland, Southern Finland and Pirkanmaa-Satakunta.6 ▶ 71 Cashless society
  • 72. Security is one of the reasons why many offices and businesses are considering limitation of cash payments. For example, one of the biggest travel agencies in Finland, Aurinkomatkat, does not accept cash payments in its service offices for security reasons. According to the Federation of Finnish Financial Services, even banks have limited the availability of cash services in bank branches. Since early 2011, in some bank branches it has not been possible to withdraw cash. The provision of cash services is not a requirement for a banking licence.7 The bank branch network has also been reduced. At the end of 2012, there were 1,486 bank branches (ECB, Payment Statistics), a decrease of 41 over the previous year. In Finland, the proportion of bank branches to the number of inhabitants is somewhat higher than in Sweden, and about the same as in Denmark, but below the European average.8 Compared to the beginning of the millennium, the number of ATMs has fallen by about 10 per cent. At the end of 2012 there were 1,667 ATMs in Finland. The number of ATMs in Finland in relation to the number of inhabitants is on a par with Sweden, but lower than in Denmark and below the EU average.9 Finns are constantly making less and less use of ATMs. Whereas cash withdrawals in 2001 totalled EUR 248 million, last year the figure had dropped to EUR 162 million. The amount per withdrawal has not fallen as rapidly. “Customers are visiting ATMs less frequently and withdrawing larger amounts of money,” stated Jyri Marviala, Development Director of Automatia Oy in an interview with YLE (Finnish broadcasting company).10 There are also new ways for consumers to get cash. The new cashback service enables customers to withdraw cash at a checkout counter in connection with a purchase made using a Visa or MasterCard payment card. Major Finnish retail chains (Kesko and S-Group) have introduced this service for their customers, and Nets is offering the cashback service for all its merchants. Finns have access to cash, and the Bank of Finland, which is closely monitoring the avail- ability and usability of cash, does not see a need for regulation yet. Where to go from here? Most citizens believe cash is free of charge, because the real costs of cash are mainly hidden and rarely charged directly, but in fact the total costs of processing cash are significant to society. There are costs such as transportations, insurances, handling money in several steps such as banks and shops, as well as the fulfillment and maintenance of ATMs. The research published by Bank of Finland, in 2011, indicates that cash causes for banks loss of more than € 100 million a year.11 In a past two years number of bank branches offering cash services in Finland has been decreased, but number of ATMs on the other hand is about the same and a new cashback service has implemented. So actually Finns have access to cash services as well as a decade ago. Almost everyone over 16 years have a payment card or two and merchants have payment terminals. Payments have been digitized. The Government’s programme for eliminating the grey economy and restrictions on use of cash will proceed. Several initiatives and laws will enter into force during next year. The law on the obligation to provide a receipt came into force on 1 January 2014 and in early November 2013 was announced an initiative of smart card to construction workers. Since July 2014, all construction workers should have a Valtti smart card12 ,which allows monitoring who visit the sites on a daily basis. • 74%prefers cards 72 Digital values
  • 73. The Bin Laden of money One of the highest-value bank­ notes ever to see the light of day was produced in 2002. That was the 500 euro note, which quickly acquired the nickname “Bin Laden” because very few people had seen it, even though its existence was well known. Thus, in 2011 (October), there were some 600 million 500 euro notes with a combined value of no less than roughly DKK 2,250 billion in circulation in the euro- zone – despite the fact that such a high-value note is impractical asaneverydaymeansofpayment and risky to carry around.2 In brief … ALL €5 BANKNOTES PRODUCED IN 2012 PLACED END TO END4 … would almost cover the distance between the earth and the moon. ALL THE €5 BANKNOTES IN CIRCULATION IN 2012 PLACED END TO END5 … could circle the earth 4.6 times. Source: http://www.new-euro-banknotes.eu/ In 2009, payments cost Danish merchants approximately DKK 4 billion, mostly for cash payments, although the total value of cash payments was almost DKK 120 billion lower than the value of payments made by payment cards.3 Heavy metal If we choose to eliminate coins, Denmark would be approximately 8,000 tonnes lighter, so to speak, which is the combined weight of today’s approx. 1.5 billion Danish coins, worth approx. DKK 5.5 billion.4 1* Image: ©iStock.com/ JIMMI LARSEN Image: ©iStock.com/MGKAYA * Please find notes for this article at p. 77 73 Cashless society
  • 74. The use and cost of cash across Europe 1 http://www.ecb.europa.eu/pub/pdf/scpops/ ecbocp137.pdf Notice that the reason why Norway is absent is that Norway is not an EU Member State. 2 The Swedish mass payments market – Riksbanken studies, Sweden’s central bank, Riksbanken, June 2012, p. 48 http:// www.riksbank.se/Documents/Rapporter/ Riksbanksstudie/2013/rap_riksbankss- tudie_Den_svenska_massbetalnings- marknaden_130605_sve.pdf 3 http://www.ecb.europa.eu/pub/pdf/scpops/ ecbocp137.pdf, p. 43 4 The report by the ECB defines social costs thus: “The social costs are the costs to society, reflecting the use of resources in the production of payment services; that is, the total cost of production excluding payments made to other participants in the payment chain, e.g. fees, tariffs, etc.”, p. 15 5 http://www.ecb.europa.eu/pub/pdf/scpops/ ecbocp137.pdf, p. 6 In brief ... (p. 25) 1 715 billion cash payments - World Payment Report 2011; http://www.capgemini.com/ resources/world-payments-report-2011 2 Criminals prefer large banknotes - http:// en.wikipedia.org/wiki/500_euro_note# cite_note-UK_Ban-23 3 http://www.nationalbanken.dk/ C1256BE2005737D3/side/Omkostninger_ ved_betalinger_i_Danmark_rapport/$file/ Rapport_omkostninger_betalinger_i_ Danmark_web.pdf 4 http://www.nationalbanken.dk/ C1256BE2005737D3/side/Omkostninger_ ved_betalinger_i_Danmark_rapport/$file/ Rapport_omkostninger_betalinger_i_ Danmark_web.pdf 5 Rockwool Fondens Forskningsenhed: Danskerne og det sorte arbejde. De økono- miske råd: Dansk Økonomi, forår 2011; http://www.dors.dk/sw8402.asp 6 The cashless church - http://www.kollekto- mat.se/ In brief ... (p. 39) 1 http://www.danskerhverv.dk/Nyheder/Sider/ folkelig-opbakning-til-kontantfri-butikker. aspx 2 Interviewundersøgelsen Saving, borrowing and paying in Finland udarbejdet af IRO Research OY for Federation of Finnish Financial Services, februar 2013. 3 Dirty money - Ingeniøren, March 26, 2013 http://ing.dk/artikel/40000-bakterier- paa-danske-pengesedler-157438 4 Travelling light - http://news.bbc.co.uk/2/ hi/uk_news/8678886.stm Notes 74 Digital values
  • 75. 5 https://www.nationalbanken.dk/DNDK/ money.nsf/side/Sedler_og_moenter_ i_tal!OpenDocument# 6 EUR 84 billion in costs - http://www. rbrlondon.com/reports/futureofcash 7 PAYMENT SYSTEMS WORLDWIDE - A SNAPSHOT, Outcomes of the Global Payment Systems Survey 2010, The World Bank 2011; http://siteresources.world- bank.org/FINANCIALSECTOR/Resour ces/282044-1323805522895/121534_text_ corrections_3-15.pdf Empowering people through digital payments 1 PAYMENT SYSTEMS WORLDWIDE – A SNAPSHOT, Outcomes of the Global Payment Systems Survey 2010, The World Bank 2011; http://siteresources.world- bank.org/FINANCIALSECTOR/Resour ces/282044-1323805522895/121534_text_ corrections_3-15.pdf Non-cash included in the survey: “cheques, direct credit transfers, direct debits, and payments with debit cards and credit cards. On a worldwide basis, debit cards are the most used means of payment in 34% of countries, followed by cheques. An analysis by income level shows that cheques are the most used payment instrument in 65% of low income countries compared to only 13% in high income countries.” p. 43. “While, for example, in the EU and ODC regions an individual performs on average 100 or more cashless transactions per year (and even 300 or more in several cases), this same indicator is around 13 for EAP, 20 for LAC and ECA, and less than 1 for the SSA region (South Africa excluded).” Executive Summary p. viii. 2 http://www.siliconafrica.com/will-nigerias- mobile-money-project-beats-kenyas-m- pesa/ 3 http://techloy.com/2012/07/01/nigeria-had- mobile-money-before-kenyas-m-pesa/ 4 Samson Akintaro, “Going Cashless – Knock! Knock!! Here Comes the e-Era”: “Over the years, one key factor keeps rearing its face whenever Nigeria wants to move ascend certain developmental level and that is infrastructure. Unfortunately, years after years, the story remains the same. Power infrastructure, in this context, stands as a key factor in driving the e-payment system Nigeria. Obviously, those who are being pessimistic about the system in Nigeria are coming from the angle that a nation without stable electricity cannot run a successful e-payment system. Besides this is the chal- lenge of telecom and banking Infrastructure, which are seen as not currently sufficient enough to support all the applications that would help the country attain a cashless society. At present, POS terminals are spar- ingly available in the country, and that is even in the urban centres, Likewise ATM machines. Moreover, for POS terminals to work effectively there must be a robust infrastructure in terms of high bandwidth internet and the Grand Packet Radio Service (GPRS) an essential service provided by the GSMtelecomoperators.Fornow,availability of these infrastructures are limited.” http:// www.ittelecomdigest.com/cover12-dec.htm ▶ 75 Cashless society
  • 76. 5 “The Central Bank of Nigeria (CBN) has introduced a new policy on cash-based transactions which stipulates a ‘cash han- dling charge’ on daily cash withdrawals or cash deposits that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies. The new policy on cash-based trans- actions (withdrawals & deposits) in banks, aims at reducing (NOT ELIMINATING) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (pay- ments for goods, services, transfers, etc.).” http://www.cenbank.org/cashless/ 6 CGAP: “Is M-PESA Replacing Cash in Kenya?” http://www.cgap.org/blog/m-pesa- replacing-cash-kenya 7 http://www.cgap.org/blog/m-pesa-replacing- cash-kenya 8 http://siteresources.worldbank.org/ EXTGLOBALFIN/Resources/8519638- 1332259343991/N4ssaEN_08202012.pdf 9 http://siteresources.worldbank.org/ EXTGLOBALFIN/Resources/8519638- 1332259343991/N4ssaEN_08202012.pdf 10 http://betterthancash.org/news-releases/ digital-payments-and-financial-inclusion- key-to-poverty-alleviation-and-economic- growth-say-world-leaders/ 11 http://betterthancash.org/about/our-vision- and-goals/ Let’s cash in on digitisation 1 Cashless hospitality – an exposition of the con- sequences, Kai A. Olsen and Kjetil Staalesen, April 2013, p. 26; http://www.nhoreiseliv. no/kunnskapsbase/et-kontantfritt-reiseliv/ 2 http://www.globalblue.com/corporate/news/ italys-policy-on-cash-payments-limits-sales/ New payment trends in Finland 1 FKmemo25.9.2013:Käteisenrahantarjonta osana maksutapojen muutosta http://www. fkl.fi/kannanotot/kannanotot_ja_muistiot/ Dokumentit/Kateisen_rahan_tarjonta.pdf 2 http://www.vm.fi/vm/fi/05_hankkeet/0106_ harmaa_talous/index.jsp 3 http://www.vm.fi/vm/fi/05_hankkeet/0106_ harmaa_talous/index.jsp 4 http://www.tem.fi/harmaatalous 76 Digital values
  • 77. 5 http://www.fkl.fi/materiaalipankki/julkaisut/ Julkaisut/Saastaminen_luotonkaytto_ja_ maksutavat_2013.pdf 6 http://www.maanmittauslaitos.fi/tiedotteet/ 2013/09/suositus-maksa-ostoksesi-kortilla 7 FKmemo25.9.2013:Käteisenrahantarjonta osana maksutapojen muutosta http://www. fkl.fi/kannanotot/kannanotot_ja_muistiot/ Dokumentit/Kateisen_rahan_tarjonta.pdf 8 FKmemo25.9.2013:Käteisenrahantarjonta osana maksutapojen muutosta http://www. fkl.fi/kannanotot/kannanotot_ja_muistiot/ Dokumentit/Kateisen_rahan_tarjonta.pdf 9 FKmemo25.9.2013:Käteisenrahantarjonta osana maksutapojen muutosta http://www. fkl.fi/kannanotot/kannanotot_ja_muistiot/ Dokumentit/Kateisen_rahan_tarjonta.pdf 10 http://yle.fi/uutiset/otto-automaattien_ maara_vahenee__kateisen_rahan_nostot_ romahtaneet/6765284 11 Suomen Pankki, Vähittäismaksamisen kustannukset pankeille, 12/2011 12 Suomen Tilaajavastuu Oy https://www. veronumero.fi/ In brief ... (p. 73) 1 http://www.new-euro-banknotes.eu/ 2 TheBinLadenofmoney-http://en.wikipedia. org/wiki/500_euro_note#cite_note-UK_ Ban-23 3 http://nationalbanken.dk/DNDK/ Publikationer.nsf/side/Omkostninger_ ved_betalinger_i_Danmark_rapport! OpenDocument 4 Heavy metal - The road towards cashless society; Michael Juul Rugaard, 2013. 77 Cashless society
  • 78. january 2014, Copenhagen, Denmark. 2013 Digital Values by Nets®. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of Nets Holding A/S. Unlawful use of this publication is covered by the Danish Copyright Act. The information contained in this publication has been obtained from sources the proprie- tors believe to be correct. Nets cannot be held responsible for information or statements in this publication which turn out to be incorrect. Furthermore, Nets cannot be held responsible for content that does not derive from Nets but is included in this publication deriving from third parties. If Nets becomes aware of any incorrect information included in this publication, we will make efforts to issue a statement correcting this, but accept no legal liability. DigitalValuesbyNetsispublishedbyNetsHolding A/S, Lautrupbjerg 10, 2750 Denmark. There are twoannualissuesandbothareprintedinBallerup, DenmarkbyRosenbergBogtryk.TheeditorisKlaus Sejr Madsen (ksmad@nets.eu). The contributing editorsareMichaelJuulRugaard(mjrug@nets.eu) and Frode Riis Andersen (frand@nets.eu). To subscribe, please visit www.nets.eu or send a request to subscription@nets.eu, and add your contact details. For any other enquiries or ques- tions relating to our magazine, please contact digitalvaluesbynets@nets.eu. ISSN 2246-2503
  • 79. IssueOne/2014 by Nets by Nets Money, Money, Money- but not in cash Former member of ABBA Björn Ulvaeus has a vision for Sweden Are people ready to go cashless? New Nordic survey sheds light on the matter Cash or digital payments? A simple question worth billions of euros Say goodbye to large notes How removing them can reduce moonlighting and crime Reaching the next level of payment evolution Will consumers stick to banks as providers of payment instruments? IssueOne/2014 Issue One / 2014 Theme: Towards cashless society 01-01-2014_1