Denmark legislation another step towards a cashless Nordic region

Selected types of Danish retailer could soon be permitted to turn away customers who can’t pay electronically

As part of a pre-election economic package proposed by the Danish government, selected types of retailer could soon be permitted to turn away customers who can’t pay electronically. Should the legislation pass as expected, clothing stores, restaurants and petrol stations will be able to legally refuse cash payments from as early as 2016.

Such legislation already exists in neighbouring Sweden, where retailers can simply put up a notice if they do not want to accept cash.

“We are strongly in favour of the legislation but would like to see a broader scope covering all businesses, as in Sweden,” said Sofie Findling Andersen from the Danish Chamber of Commerce.

“We are seeing the mobile payment market developing fast, but what is holding the industry back is the necessity to run these innovations alongside a cash-based system. Danish central bank studies show cash systems are one of the most expensive for businesses to run.

“We are also concerned for the safety of employees who handle cash, especially those working night shifts in densely populated or remote areas,” she added.

In practice, the legislation will make little difference to most Danish consumers. Daily life in Denmark, as in other Scandinavian countries, is already mostly cashless. Retailers accept payment by debit or credit card for even the smallest sums and only 25% of all retail transactions were paid for by cash or cheque in 2014 in Denmark, according to the Danish Payment Council.

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Mobile payments are gaining traction too, with more than two million Danes using an official Danske Bank app called MobilePay. The app, which is linked to a user’s national insurance number, allows payment to be made to other phones or to a sensor at the till, with a simple swipe on the screen of a smartphone to confirm payment.

MobilePay is available for everyone in Denmark 15-years-old and above who has a smartphone, a Danish mobile number, a Danish payment card and a Danish bank account. Key to the high level of adoption was the acceptance of customers from any bank. Danske Bank reports that more than one-fifth of all retailers – both online and physical stores – accept MobilePay.

Ever since the internet came of age, there have been whispers of a cashless society, but while many countries have encouraged the practice, such as the UK experimenting with contactless payments, it is the Nordic region – Sweden and now Denmark – that is the first to move.

The rationale for Nordic governments is clear. Cash is easily destroyed, lost, and makes tax evasion and illegal transactions more straightforward to hide. But smaller retailers and sole traders could easily be left behind, so the key to total adoption is easy-to-use and flexible technology, something the region already has solutions for.

Along with MobilePay, the wireless card reader from Swedish payments company iZettle is already popular and could be the best system for smaller Nordic traders until technologies such as Google Wallet and Apple Pay are rolled out worldwide.

"These alternative payment methods could be great solutions for small businesses, especially those who operate on a seasonal basis and do not need or want to pay for a fixed terminal all year round,” adds Andersen.

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