Cash payments: Abolition could lower VAT rate
Representatives from Danish businesses have recently expressed a desire to be able to refuse cash payments, including in statements to DR. But what do experts in the payment sector actually think? Hear what the CEO of Shopbox, the Danish digital cash register system, has to say about cash payments and what our future might look like if Danish coins and banknotes are completely abolished.
A broad majority of the business community prefers cashless payments. As our society becomes more digitalized, many business owners want the right to refuse cash payments if a customer doesn't want to use their payment card.
Currently, it is not legal to refuse cash payments.
Brian Mikkelsen, director of Dansk Erhverv, states to DR: “It is completely archaic to have a law that says you must accept cash in stores. If they choose to accept cash, that is their choice, but it should be possible to say no."
Other directors have followed suit and expressed their agreement, partly due to security reasons. Without cash registers, the likelihood of robberies decreases. Therefore, cashless payments would create a safer society, according to one perspective.
Andreas B. Iversen, CEO of the fintech company Shopbox, agrees that the future should involve less cash payment. However, one of his rationales stands out from the others who have commented on the matter.
What would happen if we lived in a world without cash?
Andreas B. Iversen believes that cashless payments could improve the economy in society, as it would potentially reduce the black economy: “If significantly fewer places accept cash, it would naturally increase the use of digital transfers, which always have a traceable transaction history that could potentially be exposed. This risk would result in people holding back from engaging in undeclared work, which is positive.”
Cashless payments could lower the VAT rate
Interestingly, cashless payments might eventually lead to a reduction in the VAT rate, which would benefit everyone. Andreas explains that if there is less undeclared work, the number of VAT payments to the government would increase, potentially leading to a decrease in the VAT rate. “This happened with the vehicle registration tax. When it was lowered, the state's revenue actually increased. Therefore, I predict that cashless payments could boost the Danish economy,”, Andreas elaborates.
Over the course of just a few decades, we have witnessed the development of preferred payment channels. At one point, cash and chequebooks were the dominant forms of payment. Now, as society has become more digital, several new options have emerged, transitioning from the dominant use of cash – to cards – to mobile payments. Particularly, mobile payments via QR codes are expected to see growth in the future, predicts Andreas, who does not ignore the potential pitfalls of digital payments.
What about the pitfalls?
When considering the pitfalls, it could be problematic for children to handle finances if they don't have physical cash in their hands. However, this concern is being addressed through several digital tools such as MyMoney, which helps children and young people navigate the digital economy. Danske Bank has also dedicated an entire universe to children and young people's finances, and this is likely just the tip of the iceberg.
“As long as we are aware of the pitfalls and can teach our young people how to use tools to manage digital payments, the future looks bright."
It's hard to deny that we are gradually adjusting to a cashless future, and as a society, we are slowly minimizing negative risks, so there is no need to fear the development. However, when the abolition of cash payments will be fully implemented is up to the politicians in Parliament.