Advanced Cash-less Countries; Trend in Nordic countries 1/2

by Koichiro Ohira, Senior Fellow

Solving the problems
The most common method of payment might be cash at retails shops for articles and services. Cash has its advantages that the money can be transferred to the recipient on the spot and the settlement is confirmed and completed at the time of the cash being paid. Cash, however, has its disadvantages that the control is difficult to check how the money is being used, thus encouraging the criminals such as tax evasion, and, it involves higher cost for distribution and storage.

In order to challenge these issues the global trend is for promoting cash-less payment like mobile payments by cards (pre-paid, debit, credit), checks, bank transfer and lately by smartphone. In my report written in this April I explained the explosive growth in China of QR code payment and strongly promotion of cash-less society, but Nordic countries such as Denmark, Sweden, Norway, Finland are advanced cash-less countries as well.

Usage of Cash only 20%　now
In Denmark the ratio of usage of cash at the retail shops used to represent about 60% in early 1990’s , but, is now representing 20% only in 2015, while the ratio of usage of card payment has risen up to about 80%. Actually card payment is available and promoted at every points such as retail shops , automatic ticket vending machines, share bicycle ticket machines. The author lately stayed in Copenhagen for a week and did not exchange money at all, but, survived only with credit card for daily payment. Separately from internationally acknowledged credit cards like VISA, there is domestic debit card called Dankort widely used in Denmark and the number of Dankort cards issued so far until the end of 2016 is equivalent to the number of people in Denmark. One of the factors to prevent card payment from wide acceptance at retails shops is considered as rather high cost burden of payment commission, but, Dankort has been successfully increasing the number of membership shops with lower cost of payment commission. In Finland as well the ratio of card payment for daily articles has reached 80%, and, retails shops are finding it difficult to manage their nosiness without card arrangement.

Contactless
On the other hand there is new trend in card payment. It is contactless card which is growing very rapidly. Via near field wireless communication the card can be read and used by only touching card readers like electronic money system in Japan. This card payment is now widely and rapidly promoted in Denmark and Finland.

The payment method with the use of smart phone is represented by P2P mobile payment service which is also widely available. Each country has its own popular service such as MobilePay in Denmark, Swish in Sweden, and Siirt in Finland.

This payment method by smart phone is lately being promoted for retails shops but its use seems to be still very limited. Because the card payment has been already widely and conveniently used, the people may not be so motivated to use mobile payment method by smart phone. This situation is rather different from that in China where mobile payment has been developed earlier than the development of card payment.

It seems that every country or region has its own way and characteristics for its own popular payment method.