Last week I wrote about the growing (or at least, continuing) popularity of cash in Switzerland, so this week I am looking at the other end of the spectrum. I recently spent a long weekend in Copenhagen and while I was preparing for the trip, I realised that I didn’t have any krone. I contacted the friend I was visiting to ask about using local ATMs and she said, “Don’t bother – you won’t need cash anyway”. And she was right: from getting the metro into town from the airport, to our numerous fika stops (that’s a remarkably handy Danish word for “meeting up for coffee, cake and chat”) and beyond, I was card-ish and contactless. I spent the whole weekend without a single krone in my purse. Although Sweden is leading the charge – many of their retail outlets and transports systems now refuse to accept cash at all, to keep costs down and to protect staff – Denmark is not far behind. Fewer than 25% of transactions in Danish shops involve cash, while the Danmarks Nationalbank estimates that 46% of Danes carry less than 100 krone at any given time. That’s £11.50. And remember that Denmark is an expensive little place, so that’s probably just about enough to get a lunchtime sandwich.
Personally I don’t need even more ways to pay for things – it’s easy enough to spend with just cash and cards – but trendy youngsters are using Apple Pay and Google Pay on their phones and watches. Meanwhile Amazon has also opened “Amazon Go” convenience stores in Chicago, Seattle and San Francisco, where customers scan a barcode linked to their Amazon Prime account when they enter the store and their purchases are charged to the account instead of individually purchased at checkout.
From an AML point of view, this all seems like a good development: the more transactions we can route through regulated institutions, the harder it is for criminals to move their money without detection, and the more perfect an audit trail we will have for prosecution and confiscation purposes. But there are social concerns.
In June 2018, the FCA’s “Financial Lives” survey (of 13,000 people) revealed that 1.3 million adults in the UK (3% of the adult population) are unbanked, i.e. have no current account or alternative e-money account. The unbanked are most likely to be the young – often unemployed or homeless – and the elderly (who may distrust financial institutions or feel left behind by the move to online banking with its attendant closure of local bank branches). And concerns about people being denied access to products and services if they can’t go cashless has created something of a backlash. Philadelphia has become the first US city to ban cashless stores: in July 2019 a new law will come into effect obliging most retail outlets (shops and restaurants) to accept cash. According to Philadelphia city councilman Bill Greenlee, the new law restores the right of everyone with money to do business in stores: “I can go into a coffee shop across from City Hall that’s cashless and get my coffee and muffin, but the person behind me that has United States currency can’t get the same cup of coffee. It’s a fairness issue; it creates an us-and-them kind of situation.” So there’s the real difference between European and American coffee: it’s not the strength or size – it’s how you pay for it.