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  1. Analysis
December 9, 2019

Going cashless: what are the key issues?

By Evie Rusman

As the move towards a cashless society gains momentum, a roundtable of experts at IT consulting services CGI discussed the major issues involved in the transition. Mohamed Dabo reports on the debate.

In Sweden, proponents of a cashless society invoke the reduction in robberies as a rational, said Robert Brook, director of consulting services. When bus drivers were threatened with robbery, the bus drivers’ unions decided that buses will stop accepting cash, Brook said.

Andy Schmidt, VP of Global Banking Lead, thought that was interesting. “Because in the States, this isn’t really an issue. In fact, it’s much easier to rob a bank electronically. Physical safety is less of a factor,” he said. “However, one of the primary considerations, at least here in the States, is access.”

Schmidt explained that about a quarter of the US population is “unbanked,” without access to this new cashless world. The issue there, he said, is to maintain these people’s full access to the economy.

“We don’t accept cash here”

Access to all segments of society is an important social issue, agreed Charlotta Ward, head of bank for CGI’s operation in Sweden. “Many times in Sweden, you see young children, the elderly, immigrants, and tourists struggling to pay for things without access to electronic payments.”

Yes, and this is something peculiar to Sweden, Brook said. “Shop owners can post a note in the window to state that they only accept card payments. This then becomes binding when the customer steps into the store, and there is no obligation for the store to accept cash. Stores can choose their preferred payment method.”

But the same goes for the Netherlands, said Joe Knightly, VP of Consulting services. Shop owners there too are under no obligation to accept one form of payment or another.

Also, as in Sweden, “higher frequency or higher value cash deposits are charged a fee by banks, in the Netherlands,” he added.

ATM pooling

What is significant, Knightly went on to say, is that banks are seeking efficiencies through ATM pooling. “While the overall number of ATMs will be reduced, the initiative strives to maintain optimal coverage across the country by applying the so-called five-kilometre standard.”

This is a norm that residents can withdraw cash within a five kilometre radius.

Similar discussions about the nature of ATMs are taking place is Sweden as well, Brook said. “How many will there be? What they will look like? We have unique issues in Sweden because our population spreads across vast areas, which adds to the cost.”

The Scandinavian country is looking at alternative ideas, he said, including using retail merchants for cash withdrawals, cash recycling machines, and ATM pooling.

In the UK there’s an idea under discussion for helping to ensure access to cash in rural areas, Norton said. “Paying retailers to offer cash-back services. This helps the retailer by reducing the amount of cash processing. Of course, the merchant receives payment to do this.”

He said the measure would also help the bank by reducing the cost of physically moving and processing cash. More importantly, it would support the community by ensuring that cash continues to circulate in their area.

What should banks consider? 

Norton said banks should consider looking at ways of reducing the cost of processing cash, reducing ATM pooling, merchant cash recycling, and more effective cash management.

“As well as looking at ways to stop cash from getting into bank systems in the first place,” Schmidt added.

Ultimately, Brook noted, our individual behaviour as customers will drive the future of banking.

Absolutely, Charlotta agreed, “It is behavioural driven, but there are certain behaviours that can be encouraged through cash incentives or similar initiatives. It depends on what behaviours we want to see.”

And, it is a good opportunity for societies to help “unbanked” populations become “banked,” which will result in positive affects for the whole population, Brook said.





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