Denmark is inching closer to becoming cashless
cnbc.com
cnbc.com
The payment processor, Nets, is a monopoly, owned by US investment firms. They have frequent outages and are unapologetic when they do. There is no transparency. They have a terrible privacy record (see https://en.wikipedia.org/wiki/2014_Se_og_H%C3%B8r_media_scan...). Until last year everyone down to their phone support staff had open access to everyone's payment records (see http://www.computerworld.dk/art/230818/alle-kundeservice-fol... -- in Danish). Despite all these issues they just laid off a bunch of people. Their only priority, it appears, it making money for the owners.
Money is a critical piece of infrastructure and these guys absolutely cannot be trusted to implement it. With more payment processors and a regulatory framework that forced them to provide decent service maybe cashless is not a bad idea. With the current implementation though there's a good chance it will be a disaster. It will certainly be a gaping vulnerability for anyone who should feel like targeting us; I wouldn't be surprised if all it would take to bring the whole thing down is one lone hacker.
In addition, the dankort is strictly regulated to the benefit of consumers which the banks dislike because it limits how much they can charge when you use it. They have an interest in pushing people to visa or mastercard or their own mobile payment solutions which don't have the same restrictions. The payment processor itself is developing their own alternative to compete with the dankort which they are mandated to also implement. I don't think they provide bad dankort service on purpose but it's a concern that good service is actually against their own economic interest.
But then again, Danes never seemed to care much about privacy (you can look up a person's address and all kinds of personal data if you know their social security number, for example), so I doubt there's going to be much backlash.
Denmark has much stricter laws for privacy than USA: Companies are not allowed to sell your address or phone number to other companies. So Danes don't mind giving Blockbuster their address because they know it won't be sold to 3rd party.
Also a Danish social security card (the kind you show to doctors or hospitals, so you take it everywhere) contains your full address and the CPR number. Handy if someone finds your wallet, so they can bring it back. Unless of course they want to screw you over, because all relevant personal info is on that single card.
If you find a Dane's wallet, you can basically do any kind of business on their behalf that doesn't require showing a picture ID.
That is correct. Unless your address is "protected" a large number of companies with access to CPR can look up your address. No privacy to speak of there.
Yes, the Danish social security card contains the CPR number (SSN).
A big (huge) problem in Denmark has been created as an unintended consequence about fear of "having a number assigned" to you. As a result of much debate in the 1960-70's, the compromise was to designate the CPR number as "confidential". Which was really, really stupid in the first case because 6 digits out of 10 is your birth date, one is a check digit, so in reality you have very, very limited entropy.
But worse, because many confused confidential with secret, misguided companies (and authorities) started using it as an authentication method. The logic being that since 3rd parties were not supposed to know the "secret", proving this knowledge was taken as proof that you were who you claimed to be.
Even today, it is amazing what you are allowed to do with a CPR number. So yes, it is foobar.
Other people aren't supposed to know your SSN.
A former police officer who was fed up with the poor security surrounding some online government service managed to extract and publish the prime ministers SSN and got in a lot of trouble.
Companies publish their SSN on their websites.
The key for recipient in intra-country payments is account number plus SSN.
Identity theft is rare. I've always found strange reading about credit card scams in USA where people go through your garbage and get a credit card in your name. Here you'll have to show up in person and identify yourself.
No one uses it.
What if I'm visiting and my card is not accepted, for example?
Also, this facilitates central bank policies. Like negative interest rates and lending massively to banks
As long as paper money is available as an alternative for
customers who want to withdraw their deposits, there’s a
limit to how low central banks can push rates. At some
point it becomes cost-effective to rent a warehouse for
your billions in cash and hire armed guards to protect
it.
[...]
Bank notes, as an alternate storehouse of value, are a
constraint on central banks’ power. “We view this
constraint as undesirable,” Citigroup Global Chief
Economist Willem Buiter and a colleague, economist
Ebrahim Rahbari, wrote in an April 8 research piece. They
laid out three ways that central banks could foil cash
hoarders: One, abolish paper money. Two, tax paper money.
Three, sever the link between paper money and central
bank reserves.
[1] http://www.bloomberg.com/news/articles/2015-04-23/negative-i... [2] https://news.ycombinator.com/item?id=9496568
Lately, the Austrian central bank was rumoured to play with the idea of negative interest rates so the Austrian pension funds quickly brought up the idea of just storing their paper in secure vaults. As long as the costs of storage / protection are lower can the losses due to the negative interest rates, it's a net gain for the funds.
The central bank isn't directly allowed to prevent anyone from just getting their money in cash and while they could delay it by "process", only the government itself could issue a blockage on cash deposition.
If it were me I'd start hoarding euros.
http://www.zerohedge.com/news/2015-04-25/war-cash-migrates-s...
Just like shops in Canadian border towns which accept US dollars (and vice versa), I imagine the shops frequented by visitors will either continue to accept cash -- or, if 20 years from now it's phased out entirely, accept Euros (at a discounted rate, of course).
Can you explain what you mean by this?
Canada has abandoned the penny, and that's IMHO a good thing.
If Tarsnap was paying me a bonus, that would be taxable income. But if Tarsnap was merely reimbursing me for expenses I paid on my personal credit card, that's not taxable. The taxman can only tell the difference when they turn up at my door and ask to see my records showing why that money was paid.
(The answer, incidentally, is that Tarsnap was reimbursing me for the AWS bill I paid via my credit card. Tarsnap, being a Canadian small business, can't get a US dollar credit card with a limit high enough to pay its AWS bills, but my personal credit card has a generous limit.)
(Canada might not yet be this bad - no experience there. But I've filed taxes in 3 countries that are)
Nobody can stop the tax authorities demanding you to attach an invoice to every transaction a business makes. It would be trivially easy for businesses to implement it nowadays with the software they have. Many businesses do it this way already, if they use their invoicing vendor (xero,quickbooks) to accept the payment as well.
The question of abuse is not of "if", but rather of "when".
99% of the time, I access it via a debit card at a. Granted, when I get cash I can buy something that can't be traced, but the cash man doesn't really care much what I buy, the VAT is taken from the store. If I was suspected of terrorism or some other crime that meant my assets should be frozen, that is a single push of a button already. I don't have a safe with cash, most people don't. Even if I had, it would be exceedingly hard to live cash-only, as any major purchase done in cash would be affected by money-laundry rules, so the tax man would certainly be informed if I bought e.g. a car cash (If I did so from a dealer I wouldn't be able to do it anonymously).
Salaries are paid to bank accounts and never cash/cheque (cheques don't exist), bills are paid from bank accounts and not cash Cash is tracked by anti money laundry laws and so on and so forth. So unlike in the US those prerequisites are already in place. That is why a) it's not really a giant leap to stop using cash, and b) it's not really a major privacy concern as we are already pretty much completely tracked.
And if your assets are frozen, chances are there's an arrest warrant for you and you have big issues.
There's a pretty hard limit to what you can do with briefcases of $100 bills.
Not necessarily. A friend of mine had all his bank accounts frozen by mistake in a modern western country (a tax was listed as unpaid, even though it was paid; Generally, they just take what they believe they are owed, but for some reason they couldn't and didn't, so everything was frozen instead). Took him about a (very stressful) week to resolve.
> There's a pretty hard limit to what you can do with briefcases of $100 bills.
If you live frugally, a couple of briefcases like that can go an extremely long way.
"Big issues" is right, of course. You might be a persona non-grata with the government, even though you've done nothing illegal. Governments everywhere already have too much power and they abuse it on a daily basis. This will make it easier for them. (That's the price). It will also make some law enforcement better and easier (That's the benefit). Is it worth it? I don't know, but the price seems to be completely ignored, which bothers me.
I personally think a mix of both is good. I'm a supporter of receiving electronic payments from work, with the ability to spend it as paper if I'd want to.
It depends on the country of course, but tax fraud (or even tax evasion) is rarely seen as a good thing.
Just looking at the list it felt so wrong. Everything I bought, with the day on it, the person that attended me FOR YEARS.
I mean, they had all this information about me that even I do not have about myself so they could study me like a Guinea Pig.
Governments are collecting more information about us that the Stasi or KGB. Transcribing our phone conversations, our GPS position, and now everything we buy, where we buy it, when we buy it and soon with whom we do it.
This is a serious problem. We are predators by nature, the first thing hunters do is study the habits of their victims so they can find vulnerabilities.
Too much power in a few hands. This people also have the power to make money, and want to ban cash so they can force you interest in your own savings(negative interest or tax your money).
And now you know what's the purpose of a discount card
"Sure, let me just find my phone....ok, firing up my MobilPay app...selecting your name from my contacts....entering amount of $10....entering my PIN for confirmation.....whoops. Getting an error. Let me try again. Uh oh, looks like the service is down at the moment. Sorry, son...you'll have to wait. Maybe it will be back up in an hour or so."
(If you don't have kids, substitute with a yard sale/flea market, handout to a panhandler, impromptu purchase at a food truck, repayment of a small loan to a friend, etc...)
Mountain of privacy horrors aside, a cashless society still looks like hell if you need to engage in a transaction with anybody or anything that doesn't have a card reader.
And the solution is neither "don't have those transactions" nor "add more card readers".
It annoyed when I moved back to the UK that I had to start carry cash again as most corner shops in the UK have a minimum spend of £5 for cards. For valid reasons as in the UK the card providers charge a much higher fee than in Norway but it generally makes me avoid those shops.
The spread of contactless cards are also a blessing (in the UK and Norway). Paying for kids ride on stationary cars in shopping centres, even quick charity donations, etc are all great friction removing innovations. (http://www.fundraising.co.uk/2015/01/22/cruk-trials-contactl...)
I suggest that card providers would charge an even higher fee if nobody was using cash.
Those two things appear related but they really aren't. The claim that you need a detailed record of all transactions in order to maximise tax revenue and stop crime is wrong; you only need a record of the financial aspect - the value of the transaction, when it happened, what was purchased, and what tax was due. You don't need any information about who bought the items to ensure the tax is collected properly. You could have a cashless society that respects privacy by making a legal requirement for the details of who made a transaction to be stored separately and anonymously to the tax reporting information. If Denmark's system doesn't do that then they have made a choice to deliberately limit people's privacy. Suggesting privacy has to be compromised in order to report tax receipts properly is nonsense.
Is it just me that finds this odd? Or are Chiropractors much more common in Denmark?
But yeah, some of them are the same quackery as you are thinking about. Not sure why the "real" ones use the loaded name.
http://udenfor.dk/uk/Menu/News/The+number+of+homeless+people...
The number of people you see sitting on the street begging in a Danish city vs the number in a US location is vastly different.
Homeless people in DK often sell a magazine, and you can pay for this using a mobile.
Also, I don't agree with having to pay to pay, i.e. the "x%" tax on each purchase the bank takes.
It is extremely easy to make person-person or person-business payments with the apps. You only need to know the phone number of the recipient. The transfer is immediate and the recipient gets a receipt on through his/her app in seconds.
It has become a very popular way to settle smaller amounts between friends, restaurant bills etc. It is actually easier than cash since you do not need small change.
As for privacy concerns - my guess is criminals and those with privacy concerns will resort to pooling payments in some way - e.g. by converting it to some virtual currency and then back again. The tracking of regular people's transactions is of course getting much much easier.
You can get rid of the official currency, but there will always be people using some kind of currency. Currency from some other country, drugs, precious metals. Even favors.
The only people who will be completely locked in are the 9-5 types.
Besides, I expect countries like Denmark don't have power/internet outages as often us we do in underdeveloped countries.
Also, you can notify your bank if you're travelling abroad so they don't reject anything. It's actually mandatory for some banks.