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EXPLAINED: The pros and cons of Norway going cashless

Robin-Ivan Capar
Robin-Ivan Capar - [email protected]
EXPLAINED: The pros and cons of Norway going cashless
The Local talks to an expert to find out more about the upsides of a cashless society, how the transition is coming along in Norway, and the potential risks and downsides people need to be aware of. Photo by Clay Banks on Unsplash

Cash is rapidly losing popularity among Norwegians. The Local talks to an expert to find out more about the benefits and downsides of a cashless society.

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Regardless if you're moving to Norway or just here on a tourist trip – the absence of cash in the country will likely leave an impression on you.

From buying goods in shops to ordering takeout and making church offerings, it can often feel like everyone in Norway accepts cashless payment (most often via the omnipresent e-payment app Vipps).

READ MORE: Why Norwegians have turned their back on cash

While cash seems to be on its way out, there is still an intense debate in Norway over whether going entirely cashless is a smart idea.

The Local talks to an expert to find out more about the upsides of a cashless society, how the transition is coming along in Norway, and the potential risks and downsides people need to be aware of.

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A swiftly changing society

Håkon Fyhn, an associate professor at NTNU who researches robotisation, digitisation and automation, told The Local that Norwegian society is characterised by a high level of trust in government and banks, so people don't use cash because of a lack of trust in digital money.

He also pointed to several other reasons why cash is becoming less popular among Norwegians.

"The short answer is that for most people in Norway, there are now digital alternatives that are more convenient to use and readily available - notably credit cards (on plastic or phone) and 'Vipps' (a Norwegian phone-based money transfer service) for small and medium exchanges.

"The background for this is that most people have access to these services in Norway; kids tend to get a debit card and a Vipps account when they are quite young, certainly when they start needing it to pay for games, etc., in the digital world," Fyhn explained.

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Benefits and downsides

The expert also highlighted the key benefits and downsides of Norway's transition to a cashless society.

“(As for the benefits, it's) easier to use. Easier to have some kind of record of the money you spend (even though it is also easier to spend more
for people who don't really pay attention to their accounts).

"I would like to say that it is easier for the government to keep track of money transactions concerning crime or money laundering, but I don't think this is the case. There are ways to hide such transitions that seem to work. Further, with crypto money, the grey zone is just enormous.

"Simultaneously, the sphere of crypto money can also count as a benefit, as it frees transitions from the bank system and currencies. Still, I am not sure how much this matters in Norway. (This matters) more in countries with unstable currencies and governments.

"A benefit I have observed with the Vipps system is that it encourages small transactions, such as selling your old skis to someone rather than throwing them away. The Vipps payment method is so nicely integrated into services for small transactions that these transactions have become very safe and easy to use. I think the full impact of Vipps as easy payment from a private person to a private person is still to unfold in the years to come," Fyhn said.

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He also noted some clear downsides related to the digitalisation of money.

"A lot of people are excluded from the digital world, most notably elderly people who still don't know how to access their e-bank or pay a credit card bill. There are actually many such people, and they need to be taken seriously. Basically, a generation of citizens is, to an increasing extent, excluded from parts of society. Suddenly they cannot take the bus anymore as they only pay with cash.

"At some cafes, they will not be able to order food as this needs interaction with a digital menu and digital payment. Banks no longer have a help desk where they can go and get things sorted out. Looking at it, I see a tragedy unfolding right in front of our eyes.

"In addition to the elderly, this problem also goes for people with disorders preventing them from getting into digital tools. Also, some immigrants have the same problem. Street musicians are the same; when no one carries cash, they don't get any money. Some have made arrangements using Vipps, but many don't have access to that.

"Another thing that needs to be considered concerning the digitalisation of money is the grey or black economy of 'shady' business. It is foolish to think that this economy will go away with the digitalisation of money, and perhaps it would not be good for the rest of the economy if it disappeared. With the digitalisation of money, we should really think about how the grey economy is transformed and how this transformation might lead to something we might consider better or worse.

"Talking about cryptocurrencies, an obvious downside is the energy consumption in production and use. It seems this is not sustainable, the way it works now," the professor concluded.

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