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Denmark Leads the Way Towards Ending Cash

Sometimes money doesn't make any cents

By Rain Noe - May 12, 2015

in Object Culture

Cash is expensive to manufacture. As we saw in our article on The U.S. Mint's Production Materials Problem, a penny costs 2.4 cents to make, while a nickel costs more than double its actual value. But governments continue to manufacture physical currency because previously, that was the only way to enable commerce and hence, economic growth.

Cash is also expensive (and time-consuming) to use. A 2013 Tufts University study found that using cash costs American citizens and businesses some $200 billion annually, which boils down to $1,739 per household. And sadly, those costs are disproportionately borne by the poor.

Theft ($40 billion from businesses and $500 million from individuals) and ATM fees of $8 billion make up a portion of these overall costs. But the majority of these costs come in terms of time: the average American spends 28 minutes per month traveling to get cash.

It probably comes as no surprise that the cost of cash is higher for the poor and unbanked Americans. The unbanked pay on average about $3.66 per month more than banked consumers. Poor Americans carry larger amounts in cash and pay more fees for cash transactions than wealthier Americans. Those without bank accounts use greater amounts of cash in a month than those with bank accounts.

One obvious solution would be to create affordable banking methods for the poor. Once we accomplish that, we can take the radical step that Denmark is taking: Ending cash, period.

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The country has announced that next year they'll stop printing the stuff altogether, meaning there's going to be some sweet printing presses for sale on Danish eBay. And the Danish government has announced a new proposal that will allow merchants—gas stations, restaurants, clothing stores, et cetera—to refuse cash transactions. According to Reuters, a financial institution lobbyist says that "going cashless would save shops money on security and time on managing change from the cash register."

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What this won't end, of course, is theft; it will simply shift to a different arena, less ski-mask-and-gun, more keyboard-and-mouse. But if Denmark's cashless society works on balance, it's not inconceivable to think other countries will follow suit. As Fusion's Kevin Roose puts it, "It's time to take a lesson from the Danes…and admit that the 5,000-year reign of physical currency has run its course."

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Tom McClaughry

9 years ago

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What a wonderful tool for the government to make it mandatory to track your wealth and habits and maintain that data forever. No thanks. I'll keep using my cash (even though in my practice I have never had to pay more for using it, rarely waste time getting it, and enjoy the freedom to use it and not have someone keeping records of what and when I buy stuff).

They say it's bad for the poor an unbanked - I have news for you: i was poor and unbanked once upon a time and it was so much easier. You can hide amazing amounts of wealth in cash without the government trying to get their greedy little hands on it. You can pay people after making a deal with a handshake. You can get paid the second you provide work, with the ability to take that form of payment and use it ANYWHERE, any time of day, with or without electricity, connectivity, or paying a surcharge.
You say cash has a cost, but so does using electronic payments. The business gets banged every time there's a transaction. That cost is passed to the consumer like any other cost is. The profit goes to the bank that the government and society says you need, when you really don't need a bank if you don't want one. You think they encourage banking your money to keep your money safe? NO WAY! They encourage it so they can get a piece of it in the form of transaction fees, collecting data, making sure you pay tons of taxes, encouraging other schemes that cost you money (insurance, "protection", etc.).

Gimme a break.

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L H

9 years ago

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They aren't going to stop circulating cash, they are just outsourcing the cash printing.
However it might impose some interesting transaction if they do.

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