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

by Koichiro Ohira, Senior Fellow

Reduction of infrastructures for cash payment
In this article I would like to start with the factors which successfully promoted the deployment of cash payments. First we have to acknowledge that the bank account is indispensable and fundamental for cash payment. There is many countries such as Romania in Eastern Europe where the people of more than 30% do not have any bank accounts while in Nordic countries almost 100% of the people have their own bank account.

In Finland it is regulated that banks have the legal obligation to accept any application for opening of bank account from citizens, and it is normal practice there that baby or child of 6 months old or more has their own bank account already.

Bank Transfer System
There have been specific policies adopted by the government to reduce the transaction or payment of cash. In Denmark there is a bank transfer system called NemKonto where the payment of public service such as pension and tax refund is made all into bank account, and, in Finland it is regulated that company and public administration has the legal obligation to make payment of salaries and pensions only into bank accounts. In Japan most of the people have already their own bank account, but, in order to further promote cash-less society it is worthwhile reviewing or considering seriously and positively that the legal obligation is placed for the payment of pensions and social welfare expenses should be made into bank account.

On-line
Progress of on-line shopping and on-line financial arrangement influence trend for cash-less payment. In every 4 Nordic countries the usage of on-line shopping is well above the average ratio of EU28 countries. In Nordic countries more than 80% of the people has ever used on-line banking, and, they get used to cash-less transfer of the money and capital. In progress of cash-less payments the functions have been reduced in banks to deal with cash. In Denmark during the recent 10 years the number of bank branches has been reduced by half and several main banks such as Danske Bank, Nordea Bank have already suspended the banking service to deal cash, and the number of ATM installed has been in decrease since the peak-time of 2007. In Finland as well the number of ATM has been decreased to less than the half from 4552 sets in 2000 to 2040 sets in 2015. For bank management the reduction of infrastructures to deal with cash contributes greatly to the reduction of the related cost, which is also one of the factors for their motivation to promote cash-less system.

Acceptance of the change
In Japan ATM is now everywhere, and, we, Japanese, get used to it, but, it might be necessary to encourage more the environment and atmosphere where the peoples can accept the further reduction of infrastructures to deal with cash.

Japanese Government announced in their Future Investment Strategy that the ratio of cash-less payment should be uplifted. The announcement itself t, however, might not suffice, and, it is absolutely necessary that not only the individual company but the whole society recognize and accept the change to cash-less society and its merits because this change is substantial and is involving a large variety of people and organizations in the society.

I believe that the advanced situations and systems in Nordic countries can be studied as good reference.

The payment methods cannot be fixed simply by the selection of Card or Mobile, but, we have electronic money transactions already widely accepted in Japan, so, I believe that it might be comfortable and easy for the people to accept the changes to the cash-less society based on electronic money and mobile transaction.

 (End of ICT Global Trend PART 5)