Sweden Moving Towards Cashless Economy

cold fjord writes "Sweden is rapidly moving towards a cashless economy. How will Sweden, and other countries in the future, balance efficiency, privacy, government control, and civil liberties? Or will they do all that technology allows? 'Bills and coins represent only 3 percent of Sweden's economy, compared to an average of 9 percent in the eurozone and 7 percent in the U.S. ... The Swedish Bankers' Association says the shrinkage of the cash economy is already making an impact in crime statistics. The number of bank robberies in Sweden plunged from 110 in 2008 to 16 in 2011 — the lowest level since it started keeping records 30 years ago. It says robberies of security transports are also down. The prevalence of electronic transactions — and the digital trail they generate — also helps explain why Sweden has less of a problem with graft than countries with a stronger cash culture, such as Italy or Greece, says economics professor Friedrich Schneider of the Johannes Kepler University in Austria. The flip side is the risk of cybercrimes. According to the Swedish National Council for Crime Prevention the number of computerized fraud cases, including skimming, surged to nearly 20,000 in 2011 from 3,304 in 2000.'"

Comments

Scary

[Hatta]

I don't care what sort of up sides it has. The government being able to track every last penny spent is far too frightening to even consider.

Re:Scary

[fuzzyfuzzyfungus]

We understand your concern, citizen.

Here in glorious America, we will naturally let Visa track every last penny spent, because the private sector is superior, and they will simply sell that data to law enforcement, among other interested stakeholders, as part of their process of 'monetizing consumer metrics'. Free as in 'Free Market'!

Re:Scary

[seven of five]

Don't worry... they're moving to Bitcoin.

Re:Scary

[Pieroxy]

I don't care what sort of up sides it has. The government being able to track every last penny spent is far too frightening to even consider.

Add to that the title of the previous story on Slashdot: The Risk of a Meltdown In the Cloud

Well. What could go wrong?

Re:Scary

[mooingyak]

We understand your concern, citizen.

Here in glorious America, we will naturally let Visa track every last penny spent, because the private sector is superior, and they will simply sell that data to law enforcement, among other interested stakeholders, as part of their process of 'monetizing consumer metrics'. Free as in 'Free Market'!

It's not like everyone's oblivious to the fact that when you use Visa your purchases can be tracked. I'm aware of it every single time. But right now I have a choice to use cash if I want some discretion.

Re:Scary

[judoguy]

VISA doesn't track every penny spent. I write credit card billing software. VISA, MC, et al just get a transaction total. Only the vendor knows what was charged. VISA can look at the vendor and make assumptions, however they don't know if I bought a lot of candy bars or gas or what mixture of transactions from a Mobil station.

Re:Scary

[SpeZek]

Yes, because gulags are a real problem in countries like Sweden.

Re:Scary

[MyLongNickName]

Monetary lesson: Our economy is based on goods and services. Money is only a medium for the exchange of those items. What you are suggesting is really going back to a barter system.

Second lesson: The "devaluation" that you speak of is called inflation. Yes, over time an individual dollar is worth less. We also make more of these dollars for our time. This is not some giant conspiracy.

Third lesson: Gold and land do not have a constant value. That is complete lunacy. Like every other good and service its value is relative to other goods and services

Fourth lesson: If you want to use gold as a curency, go for it. It doesn't change the underlying issue that it only stands in for the goods and/or services you wish to buy/sell.

Re:Scary

[vlm]

VISA does not know how many candy bars you bought, retail corporate does. Even back in the very early 90s I know for a fact they did, as I was getting interested in IT and our food store did complete transaction uploads nightly. Its not as much data as you'd think, even at 2400 baud. We had to upload distinct sales data anyway, think about it, otherwise how would automated push-ordering work? There were cube dwellers at corporate who's entire lives revolved around how many hamburger buns were sold the saturday of labor day or whatever.

So you are correct that VISA does not sell transaction detail records, but that doesn't mean they're not sold, it means the detail record comes from the retailer. At least it did 20 years ago.

Re:Scary

[s73v3r]

And not real money.

Gold is no more "real money" than anything else. The only value gold has is what people think it's worth, just like regular dollars.

We need to get back to sound money that "connects" to something of constant value, like gold or land.

No, we don't.

Re:Scary

[Kjella]

Well, there's the difference between mostly cashless and completely cashless. My salary is paid direct deposit, pretty much all my bills are paid electronically. I don't really care that the government knows I pay rent and insurance and electricity and broadband and groceries and that I purchase clothes and furniture and computer equipment and whatnot. But if I don't want the government to keep track of how much liquor I drink I can pay in cash at the liquor store. I can pay in cash when I'm out partying all night. Cash is for all those transactions which I don't think it's any of the damn government's business to know about.

Every so often people come up with the "now 9x% of all trade happens electronically, we should go cashless" but it's meaningless to measure it by volume. At work some 9x% I'm in the presence of coworkers, that doesn't mean I don't want privacy when I make a bathroom break. Same with all the shit people share on Facebook, even for those that share 9x% of their life there the rest matters. Yeah, it's annoying with the black market that doesn't pay taxes, but then put the effort into tracking those who make a living that way instead of taking everyone's privacy away. I don't know if I follow every detail of every paragraph in the tax code and I don't know if anyone could but it's 95%+ correct. And that damn well better be good enough.

Re:Scary

[vlm]

Wait - 20 years ago some corporate bod knew that Mr Smith of 23 Acacia Avenue bought hamburger buns? I think not.

Yes. 20 years ago is only 1992, not like the 60s or something. In 1990, 91, something like that our mid size grocery store in a mid size suburb of a mid size city got roughly 386 class machine (was it a 486?) in the managers office and it ran the dbms that read the upc from the scanner and told the register what to charge and its tax status. Also it kept a list of all loyalty cards who owed us money for bounced checks (at one point my job was keeping that list updated). We uploaded nightly at 1030 and woe to the assistant manager who couldn't "close out" before the upload began. Also we downloaded lists of bounced checks/loyalty cards from OTHER stores..

We made a big freaking deal about giving you coupons that reflected your previous purchases. Maybe, like 99% of the population, you just threw that out, but that doesn't mean we didn't print the coupons at the bottom of the register tape. You had a "check cashing/loyalty card", right? To at least some extent your coupons mailed to your door reflected your purchases... the presence or lack of baby formula and dog food tended to reflect your previous purchases... We didn't do individualized personalized coupon mailings, but we did classify them.

Now I donno if they stored all the data, or how long. Now a days you'd assume they keep it all forever. Back then I would assume they wiped whatever they thought appropriate when they needed space. At that time (err, 93 or so) I was using a 40 meg drive and a 386/40 with 5 megs ram to run SLS linux.. Can't store everything forever with that tech.

Didn't you notice that if you bought something with a CC and returned it with a receipt, we credited your card without asking to see it again? We had all that stored.

I suppose it depends on location, blah blah blah, but I was at a unnoteworthy little grocery store most nights while going to tech school in the day.

Re:Scary

[Sir_Sri]

It's not. I use cash whenever I can.

As per the article: so do the greeks and italians (and outside the euro zone, indians, arabs, bangladeshi's, pakistani's etc).

Cash sounds like a wonderful privacy tool. It's so wonderful that you can use it to dodge tax. http://www.indianexpress.com/news/goa-education-minister-detained-with-10-mn/770712/ For example.

That's kind of the thrust of the article, cash based societies are more corrupt than electronic ones, because with electronic ones you can actually track where the money is going to and from.

From TFA:

"If people use more cards, they are less involved in shadow economy activities," says Schneider, an expert on underground economies.

In Italy — where cash has been a common means of avoiding value-added tax and hiding profits from the taxman — Prime Minister Mario Monti in December put forward measures to limit cash transactions to payments under euro1,000 ($1,300), down from euro2,500 before.

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Oscar Swartz, the founder of Sweden's first Internet provider, Banhof, says a digital economy also raises privacy issues because of the electronic trail of transactions. He supports the idea of phasing out cash, but says other anonymous payment methods need to be introduced instead.

"One should be able to send money and donate money to different organizations without being traced every time," he says."

So fair enough, you think your privacy is being invaded by using electronic payments. But the government thinks you're using cash to dodge legally required taxes. And if you're both right who wins? The only way this is going to play out is asking for privacy rules surrounding the record keeping on transactions, because it's not fair to anyone when people dodge taxes, and if there's a way to track that, governments will (as they should).

Re:Scary

[snowbored]

VISA sure as heck does know. How do you think you get double points for gas, or hotel stays, or whatever? Depending on the card, up to the first 19 items you purchase get sent back to VISA. So if you don't want a record that you bought something, make it your 20th item (and don't buy 20 oranges, I wrote the software smart enough to group the same items). They do only know generic things (you purchased a food item, not that your purchased a specific candy bar), but the generic list is broken down into things like alcohol, tobacco, so they do have information you might not want them to know like that last Friday you bought a six pack and some smokes from the corner gas station.

Re:Scary

[vijayiyer]

Why not just track us all, because it's not fair to anyone when people commit crimes? Once we lose an underlying presumption of innocence, any invasion of our privacy or erosion of personal liberties seems to make sense.
It's not my job to help the government do theirs. They can catch tax cheats with good, old fashioned detective work. To presume that my heavy use of cash is somehow illegal or fraudulent is ridiculous.

Re:Scary

[fahrbot-bot]

VISA does not know how many candy bars you bought, retail corporate does.

Target certainly knows this - and more. See this NYT article: How Companies Learn Your Secrets. From page 7 of 8:

About a year after Pole created his pregnancy-prediction model, a man walked into a Target outside Minneapolis and demanded to see the manager. He was clutching coupons that had been sent to his daughter, and he was angry, according to an employee who participated in the conversation.

“My daughter got this in the mail!” he said. “She’s still in high school, and you’re sending her coupons for baby clothes and cribs? Are you trying to encourage her to get pregnant?”

The manager didn’t have any idea what the man was talking about. He looked at the mailer. Sure enough, it was addressed to the man’s daughter and contained advertisements for maternity clothing, nursery furniture and pictures of smiling infants. The manager apologized and then called a few days later to apologize again.

On the phone, though, the father was somewhat abashed. “I had a talk with my daughter,” he said. “It turns out there’s been some activities in my house I haven’t been completely aware of. She’s due in August. I owe you an apology.”

Meanwhile...

[Guppy06]

Visa and MasterCard couldn't be happier.

Re:Woe Be The Day Cash Becomes Illegal

[Quiet_Desperation]

That's why I always carry around a few small gold nuggets in case I need to pick up a bag of rice or a horse or something.

I've been "cashless" for ~5 years

[GodfatherofSoul]

I never carry it, just by debit cards. An additional benefit is that all your expenses are right there on paper via bank statements so you can evaluate your spending habits. I'd say that 95-99% of the time it's not a problem for my lifestyle, but I do have to hit up an ATM occasionally for the car wash. Now, when it sucks is when you don't realize you'll need cash (cover charge at a door), vending machine snacks, etc.

I can see it not working for younger people and their more dynamic, partying lifestyles but it works well at the micro level.

What about weed?

[TheTruthIs]

How will we buy weed in a cashless society where marijuana is illegal?

explains why they have less trouble with graft

[Attila Dimedici]

No, it does not explain why they have less trouble with graft. Scandinavian countries had less trouble with graft than Italy or Greece before there was even a concept of a cashless economy. It is a cultural thing. It is even possible that the same cultural factors that led them to have less trouble with graft also contribute to them moving so easily towards a cashless economy.

Why is crime rate even mentioned?

[MailtoDelete]

Whenever you hear of someone pushing to get rid of hard currency, they mention the decrease in crime... Yet the numbers here don't show me anything compelling. They show an 85.5% decrease in reported crimes relating to hard currency, and then gloss over a 505% increase in digital monetary crime. That's such a poor point to argue, why even mention it?

Re:Why is crime rate even mentioned?

[0123456]

That's such a poor point to argue, why even mention it?

Because there's no legitimate reason for eliminating cash, so they have to make something up.

If not for patents we would probably be using anonymous digital cash right now, but they delayed the introduction so long that credit cards ended up being the primary means of purchasing online.

Re:Woe Be The Day Cash Becomes Illegal

[Nadaka]

Gold is a terrible currency, the most overvalued material on earth. It has almost no real value. Its only practical use is as a corrosion resistant connector in basic electronics.

The currency that has had the most steady value in terms of a laborers wage over the last 4 thousand years is beer.

Re:Some disadvantages as well...

[zzsmirkzz]

I agree there are many advantages to a cashless society but one weakness has bothered me for a while.

It's not the only weakness. Try paying some kid to mow your lawn, shovel your driveway, dig a ditch without cash. Not to mention the real reasons Citizens want cash (easily accessible, accepted everywhere and untrackable) - so they can loan money, barter/trade goods without tax burden (yard sales, craigslist, etc), gamble/wager or anything else you can imagine.

It's not the government ....

[DogDude]

Forget the tin foil hat government paranoia. The HUGE problem that most people overlook is that you're handing 3% of all retail sales to Visa/MC. The problem is that this is out of sight and out of mind for 99% of the population that doesn't have a merchant account, and that people don't think that every time they use a card, Visa/MC is getting 2-3%. That's an absurd amount of a country's GNP to pay into one organization for what boils down to a convenience.

Re:Woe Be The Day Cash Becomes Illegal

[Sycraft-fu]

No, actually, consistent quantity is a big problem for currency because it leads to deflation and you really don't want that, it can hamstring an economy badly.

Simple example:

Suppose you and 3 friends decide to create your own little currency of sorts. You have favour tokens. Each time you do a favour for someone, they pay you in a token, and likewise you pay them when you want them to do a favour for you. Makes sure everyone is contributing. So you each start with 2 tokens.

Things work well, your little economy burgeons as you all do favours for each other and the tokens move around quickly. Other people notice this and want in. So you let them, however new joiners don't get any tokens to start, they have to earn it. Soon you have 8 people. Now there's only one token per person total. So if someone does a favour, someone else is left with no tokens. The economy start to get hamstrung. You have cases where someone wants to do a favour for someone else, but can't because that person has no token and nobody needs a favour from them at the moment.

Then it grows larger, you get 12 people. Now at best there will be 4 people without tokens at all times, and there can be more. Your economy is stalling in a bad way. People have to wait around until the person who wants them to do a favour can do one for someone else and get a token so they can do their favour.

Now all this could be solved simply be expanding the amount of currency. If as the economy grew, more currency was added, this problem would be avoided. This might not only happen when new people join, but just when more is being done. You start doing so much for each other that 2 tokens per person just isn't enough, you need more to keep things flowing quickly.

Money is just something to facilitate trade, no more no less. It needs to do so well and for that, it does need to grow, at least until your economy stops growing.