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Electronic Payments: Progress and Rebellion

By Bill Camarda

For decades, financial observers have speculated about the feasibility and implications of a “cashless society.” Someday, they imagined, coins and bills (notes) would be supplanted by credit cards, debit cards, and other electronic payment systems and cashless payment solutions.

Cash may still be the coin of the realm in many places, but the shift away from it is accelerating in some societies, where “cashlessness” is becoming a reality. Others are moving forward hesitantly—and in some places, policymakers are even pumping the brakes. Meanwhile, though small card and mobile payments are ramping up rapidly, they’re not always substituting for cash.1


Sweden: What a Cashless Electronic Payment Society Looks Like


Sweden, it would appear, has moved furthest towards a cashless society based on all electronic payments. There, cash represented just two percent of the value of all transactions in 2018; this is trending down to a projected 0.5 percent in 2020.2


While mature economies tend to generate more non-cash transactions, special factors might have contributed to Sweden’s rapid shift. According to Copenhagen Business School researcher Jonas Hedman, after a wave of robberies, unions representing cash-handling employees pressured the government to promote cashless payment solutions. So, too, in 2007, the government discouraged “under the table” cash payments for domestic services, ranging from babysitting to home repair, by introducing tax deductions.


Only 18 percent of Swedish consumers now say they want to pay in cash.3 In fact, Swedish central bankers have worried that the country’s cash infrastructure could actually decay, leaving payments in the hands of just a few commercial players, thus increasing risk during a financial crisis when demand for cash might soar.4 Similar concerns have been expressed in the U.K., where ATMs and rural bank branches are closing, and commercial firms supporting the cash infrastructure worry about the viability of their businesses.5


The U.S.: More Cashless Payments, But More Resistance


According to the 2018 World Payments Report, the average resident of the U.S. performed nearly 460 non-cash transactions in the most recent reporting year, only slightly fewer than in Sweden.6


Symbolizing the trend, at least one U.S. restaurant has launched without accepting cash. The restaurant told customers that eliminating cash means “it's faster for you, our guests, to place your order and get your food. You'll spend less time waiting in line. It's more efficient for our teams and restaurants because they'll get back hours of their day to cook and spend time with you in the restaurant instead of the administrative work associated with cash. It's cleaner and better for the environment because there will be no armored trucks picking up and dropping off cash, no more plastic deposit bags, and paper for cash deposit slips.”7


“Cashlessness” seems to have attractions that go beyond individual businesses. Some argue that the efficiency of cashless transactions can make entire economies more competitive, and that electronically trackable transactions are more impervious to fraud and money laundering.


But cashless businesses—in the U.S. and elsewhere—are facing pushback from those who argue that requiring a card puts stores out of reach for individuals who don’t have one. In the U.S., that would include the five percent of households that remain “unbanked,” as well as others who simply prefer not to use cards.8 In stark contrast to Sweden, 30 percent of all U.S. business is still transacted in cash.9


In addition to arguments based on equity and inclusion, still others maintain that moving towards a cashless society empowers greater surveillance, making consumers more vulnerable to cybercrime or financial system outages, such as the credit card system outage that affected U.K. and European cardholders in June 2018.


These arguments have prompted some governments to require retailers accept cash. In March 2019, Philadelphia banned retailers from refusing cash, while creating exceptions for membership stores, parking garages, and any transaction calling for a security deposit.10 Shortly thereafter, New Jersey banned cashless stores, and New York City is considering a similar measure.11


After Philadelphia’s decision, the Sweetgreen restaurant chain backed off from cashlessness.12 Amazon – which has opened 10 retail locations and reportedly intends to open 3,000 more – said it would offer cash payment options after all. Amazon’s announcement was notable, given that it earlier suggested Philadelphia’s law could affect its siting decisions.13


Globally, Cash Trumps Cashless Payments


In 2018, Bank for International Settlements (BIS) researchers found that demand for cash actually grew in many advanced economies after the 2008 global financial crisis, even as the number of electronic transactions spiked and consumers became more comfortable using cards for smaller payments.


BIS’ measurements of cash in circulation don’t address why people are using cash. Globally, the disproportionate growth in the use of large bills suggests that more individuals are using cash as a store of value—and keeping that value out of financial institutions. As BIS notes, low interest rates reduced the financial penalty associated with this practice.14


If these trends continue, cash could survive even if consumers move further towards electronic payments for everyday purchases. Interestingly, BIS found radical differences in the countries it studied. Cash demand has declined in Norway but soared in Iceland following that country’s banking crisis. The use of large notes is very low in Mexico and Sweden, but extremely high in Hong Kong, Japan, and Saudi Arabia. Along with Sweden, Russia is one of the few countries in which BIS finds strong evidence that consumers are substituting credit cards for cash at retail—but BIS also found growing demand for large bills there.15


What Cashless Payment Solutions Mean for Businesses


Facing diverse and shifting environments, observers note that retailers should remain sensitive to local conditions. In determining payment options, some suggest the need to assess not only costs and opportunities, but also customers’ preferences and policymakers’ concerns. Others believe retailers that want to reduce cash-handling costs without eliminating cash completely might consider partial measures, such as creating shopping lanes with “reverse ATMs” that take cash and give pre-paid cards in change.16



Even with the ascendancy of electronic payment systems, reports of the “death of cash” are exaggerated. It is generally agreed that retail businesses, therefore, must make continuing judgments about the best mix of payments to best serve customers and control costs.

Bill Camarda

The Author

Bill Camarda

Bill Camarda is a professional writer with more than 30 years’ experience focusing on business and technology. He is author or co-author of 19 books on information technology and has written for clients including American Express Private Bank, Ernst & Young, Financial Times Knowledge and IBM.


1. “Payments are a-changin' but cash still rules,” BIS Quarterly Review;
2. “What A Cashless Society Could Mean For The Future,” Forbes;
3. “Going Cashless: What Can We Learn from Sweden’s Experience?,” Knowledge@Wharton;
4. “People in Sweden barely use cash — and that’s sounding alarm bells for the country’s central bank,” CNBC;
5. “Access to Cash Review: Final Report,” Access to Cash;
6. “World Payments Report 2018,” Cap Gemini / BNP Paribas;
7. “We’re Going Cashless,” Tender Greens;
8. “Fed Survey: Unbanked Share of Americans Falls to 5 Percent,” ABA Marketing Journal;
9. “The Battle Against Cashless Stores,” Axios;
10. “Philadelphia just banned cashless stores. Will other cities follow?,” Vox;
11. “New Jersey Bans Cashless Businesses,” Eater NY;
12. “Sweetgreen Scraps Its Cashless Policy as Criticism Grows,” The New York Times;
13. “Amazon Go Stores No Longer Cashless,” PYMNTS.COM;
14. “Payments are a-changin' but cash still rules,” BIS Quarterly Review;
15. Ibid.
16. “The battle against cashless stores,” Axios;

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