In Sweden, a Cash-Free Future Nears | Hacker News Reader

In Sweden, a Cash-Free Future Nears

nytimes.com

41 pointsncw9650 comments

Yeah, and allow government, secret services, police and the NSA to track your entire life. Fuck that, I'm sticking with cash.

That seems like a solvable problem though. For instance, prepaid cards or apps based on a similar principle should fix this.

Ok, but how do you buy the prepaid card? Through a track able electronic purchase I'd guess.

The purchase of the prepaid card can be tracked just as getting cash from a cash machine can be tracked. But that's where the track ends. If the prepaid card is anonymous, it can be passed on to someone else as payment for instance.

Whether we have anonymous electronic payments is not a technology issue. It's a political question. The danger is that governments could use the demise of cash to ban anonymous payments altogether. I'm just saying that the loss of anonymity is not an automatic consequence of electronic payments.

By KYC laws prepaid CCs have to be registered with your name and address.

What jurisdiction are you talking about?

There are prepaid Internet enabled Visa/Mastercards available at 7-Eleven/Pressbyrån in Sweden from the supplier "Spendon" (www.spendon.se). No questions asked when purchasing them. It's sold as a "gift card" though.

At least in the US, to enable them for internet use, you have to register the card online.

Germany. Prepaid Mastercards require the shop owner to photocopy your ID card.

But that is a political decision, not a necessary feature of electronic payments. If cash really does go away at some point, political pressure might grow to make smallish anonymous purchases possible by relaxing that sort of regulation.

Look at the present. Cash remains the one widely used, untracked money.

That is one law away from automatic registration & association of prepaid card purchases.

It's already got a SN, when it's feasible $'s will have a chip too. Having the parties to the transaction decide what money is trivially fixes this, but the money changers fight to keep their monopoly.

Big downside: authorities can lock you out of the financial system.

This seems to pop up in different forms on HN every now and then and then the same arguments all take place in the comments so allow me to start.

As a Swede I would not want to have it any other way, and any time I'm abroad I miss the simplicity.

There are privacy issues and cost issues sure, but this is a general problem in lots of ways for most nations.

Do you trust your government?

I think all swedes do. I don't know any who don't trust them in the sense I think you mean.

Sure there are many who think politicians ineffective or don't agree with their views, but even petty corruption is unthinkable.

We should teach children to ask from an early age: "Do you trust unsupervised human nature in others to always act beneficially towards your interests?"

Sadly, primary and even secondary schools no longer commonly read the old classical works to cast a jaundiced eye towards unchecked human nature, to drive home the point to children that regardless of the era, form of government, technology, etc., unchecked human nature is never to be trusted for the foreseeable future (backed by copious data points over the entirety of recorded human history).

The question is not "Do you trust your government?", it's "Do you trust your next government?"

I very much trust the Swedish government based on past decisions, and a general knowledge of the Swedish character (that goes beyond cultural ebbs and flows). Also, trust is easier in a small country with a good track record.

And I trust my fellow Swedes to keep electing trustworthy governments in the future.

I think anonymous payment via cash money should be a human right. In Germany, AFAIK every merchant has to accept cash. And I prefer it that way. Sure, it is fine if every merchant also accepts any cards, or BItcoin, or whatever. But cash is important.

I can understand that from most people, buts to me its a bit like the "if you have nothing to hide argument" - it woks for the majority, but there are way too many edge cases to consider. Say for example you wanted to buy some weed - something that a reasonable proportion of normal and reasonable people do - but for political reasons is illegal. Do you really need that being trackable?

Meanwhile in NYC, paying by anything other than cash generally requires a $10-15 minimum. I find it incredibly inefficient and am sick of having to hold cash and constantly go to ATMs.

I understand that the reason these card minimums are in place is because the card companies charge a non-trivial amount that wipes out the store's margins at low prices. How can we solve this?

Bitcoin?

The problem with bitcoin is very similar to credit. It is extremely difficult for a small business to liquidate.

There is also the added problem of protection. With credit and banking, you are ensured and regulated. Without, you are left to your own ability.

But those aren't the biggest problems. The problem is how do you pay taxes with bitcoin? Their market value at acquisition? Does the market fluctuation between collections and taxes count as interest/losses? Do you have to pay taxes on money lost for changing bitcoin to local currency?

These are all very large problems for a business owner.

You could accept Bitcoin via Bitpay (or any other payment processor supporting immediate conversion to fiat) and receive fiat currency. The good thing is: No chargeback possible.

That is a very bad thing for consumers. I'm assuming BitPay skims some cream from the top, so you would still have the same problem of cards.

I find that true in grocery stores and bodegas, but less so in coffeeshops or food trucks -- perhaps places that value capturing loyalty and repeat customers over the margin of an individual transaction.

Is 3% really wiping out the margin? Square and SumUp charge less than 3% for credit card payments. At least in Germany that led to smaller minimum amounts. They are now at about 1€.

US grocery stores have a margin of roughly 2-3%.

It probably has been solved. Generally speaking, minimums are against the agreements the stores have with credit card processors. But the stores use minimums anyway.

In credit cards, certain low risk retailers get very discounted rates, such as grocers. In Australia, I think it's a flat rate for grocers to accept a card. I wouldn't be surprised if it's similarly lower in Sweden.

Also the cost of things are higher in Sweden for everything, so I wouldn't be surprised if that is rolled into the cost of things and everyone pays the credit card tax.

Also for large businesses, handling cash has a cost too & card fees are negotiated for lower rates, so accepting cards isn't as big of a deal for them.

I lived in Sweden (Stockholm) for a year. Here's what bothered me about the idea of "cash-free":

1. Cards are controlled by businesses that do not have the customers' interests at heart. What's more, it is not easy to become a card payment provider.

2. Current government may be trustable, but nobody knows what happens with the next one. The government has various forms of power over card payments which they don't have with cash. They can trace it, they can block it, they can know every aspects of your life. And it's not just your government, it's other nations' as well in some cases.

So putting all your money in one basket here is putting all your purchasing power and all your privacy in the hands of businesses that cannot be competed with and institutions that are easily corrupted.

Electronic payments are the future, there's no working around that. But are we going to find solutions to the privacy issues in time?

Welcome to a new era, one where negative interest rates have no lower bound.

I don't know how it's for native swedes, but last couple times I was visiting there (and that was a few years ago) I didn't even bother to exchange currency or have any swedish kronor in my wallet. You just can do everything without cash.

I live in Stockholm, Sweden, I don't think I've had cash in my wallet at any point this year.

Parking? Paid with an app (that charge my credit card).

Paying a friend or my kids for something? Done via the Swift app (instant bank to bank account transfer).

Buying veggies at the outdoor market? That guy will accept credit cards via a regular terminal or a phone with something like iZettle. Or perhaps even accept a Swift transfer to his phone.

Regular shopping, credit cards. At the corner tobacconist you may find an old and slow dialup-based terminal, but they are rare. Most terminals are online and operate at decent speed.

I'm sure there are cash-only businesses, but I'm not in the market for illegal drugs or no-receipt-handymans. :)

You don't have to buy drugs to find cash-only businesses in Stockholm. Maids are cash only and so are some removal companies.

Biggest benefit of cash-free economy not mentioned in the article: escape from the Zero Bound in conducting monetary policy (https://en.wikipedia.org/wiki/Zero_lower_bound). It can't be that central bankers in Sweden aren't realizing this; Sweden's central bankers have always been a notch above performance-wise.

Kinda sad that the only way we will ever solve this problem seems to be by pure accident.

But this also assumes that the zero bound is a problem for monetary policy. Personally, I believe it is a feature not a bug to have a zero lower bound.

the article isn't exaggerating; I take out two hundred kronor (not from an atm, but from the cashier at a supermarket when I pay for my groceries) and then it sits in my wallet 'just in case' for months. I carry a 10 Kr coin too, in case I need to use an old public toilet or borrow a shopping trolley.

Swish is really taking off too. Even market stalls take Swish.

The part of the story that shows its Americanism though is the intro - churches in Sweden are basically empty :)

It's similar in New Zealand...The last time I had cash in my wallet was when I visited Japan a year or so ago.

Basically if you don't have an EFTPOS terminal as a retailer you may as well not exist. Even temporary food stalls at festivals usually have a mobile connected terminal.

Imagine if you could get a percentage every time money change hands!

Here in Sweden most people don't carry any cash and would buy a stick of gum with their card. If you want to give someone money, you "swish" it to them. Swish is a massive smartphone app for people to people payments supported by all banks.

Is there any fee/commission for Swish? If there is not, was that a voluntary choice by the banks, or a regulator's requirement?

They're supposed to charge 1kr per transaction, flat fee, but they've been putting it off. They're probably getting people used to the service before starting to charge for it. Taking a note out of the drug dealer's book I suppose.

When the Swish service launched (2012) it was only consumer-to-consumer and no fees. Last year they added businesses and charge similarly to credit cards, fee on the creditor side.

Not as of now. But as Fnord mentioned, they might be charging 1 kr in the future which is fine.

If I were to guess how it works it would be like:

The receiver of a swish actually gets the money from their own bank while the sender actually just sends money this their own bank as well.

Then the senders bank will set a IOU to the receivers bank to balance things out and that will get fixed in a couple of days (the whole bank day transfers)

For person to person / peer to peer - it's currently free. For person to business/organization it will cost the business 2.5 SEK per transaction as well as a monthly fee and/or an activation fee.

Prices may vary depending on at which bank the business/organisation opens an account and activates Swish to.

For a couple of years, there was a company in Lund, Sweden that offered biometric payments. It was very convenient. Unfortunately, they quit, partly because of high transaction costs of the banks.

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