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Finland forgotten cash.”No cash” stores born

In Finland, less than 2 out of 10 people still use cash to pay. Merit of a national “recipe” started in the 70s. We have investigated to understand how the Finns arrived at this result.

To the Nordic countries. Here is where the gaze and the mind of those trying to understand how the transition from cash to traceable payments can be addressed. We see this personally whenever we do interviews related to the economic subject. “Take Northern Europe for example”, we are told.

And so we did: we looked at Finland, where the population that still uses cash to pay (according to Bank of Finland data) is 17.6%. All others (82.4%) pay by card. Overtaking occurred already in the early 2000s.

Graphic of payment in Finland with card.Cash and card payments as most common means of paymentGraphic of payment in Finland with card.

An evolution that began almost twenty years ago

So how did Finland manage to make more than 8 out of 10 people in the country use traceable payments? It was a set of factors. In the 1970s, Pรคivi Heikkinen, head of the payments department of the Bank of Finland, explained to, “banks have encouraged the payment of all salaries on current accounts by offering a free payment service”, for example.

Already in the 1990s, in their strategies, banks have given importance to the technological component, which has been constantly improved in order to “facilitate the state of the art of internet banking and card services”. But Heikkinen also includes the standardization of POS operations in the reasons that have contributed to increasing the distribution of card payments. This situation, in particular, “created constructive competition” between the sellers and the adoption of the cards was “economically efficient” for both retailers and banks.

Of course, “banking incentives for both private customers and retailers to use the new electronic and disincentive services to use services in bank branches” have also been provided, “Heikkinen adds.

Pรคivi Heikkinen, head of the payments department of the Bank of Finland

Finland has put in place a step-by-step strategy that nowadays speaks clearly of the results obtained. According to Heikkinen, the real “revolution” in Finland has been the gratuitousness of domestic debit cards for consumers and with “very low commissions for sellers”. When the domestic debit card was merged with Visa and MasterCard, the banks “agreed to keep bank commissions low for several years”, that is, until at the European level the interchange fees were not regulated.

At that point, the habit of paying by card was already a consolidated reality in Finland; the population had been, in a certain sense, “educated” to digital payment through a gradual but constant transition. Not a cultural change that has arrived overnight and which cannot be summed up in a single novelty.

Check out the shops that do not accept cash

It is thought that by pushing towards electronic money we can limit the impact on the accounts of the state of evasion. In Finland it was not reset, but according to the Bank of Finland “it is very low” in the context of a tax regime that imposes electronic receipts, electronic invoicing and salaries paid on current accounts.

A “movement” of shopkeepers is also being born to prohibit paying with cash. These sales points display a “no cash” sign on the front door. According to the Bank of Finland, this is a “still marginal” phenomenon and at the moment there are no data to examine this new habit in more depth.

“The cash tempts thieves in a restaurant” responds to Jani Osmo, Restaurant Manager of “No Pizza”, a pizzeria in Helsinki that has banned cash. “Our restaurant is right in the center of Helsinki and keeping our staff safe is a priority.”

Osmo also mentions the environmental impact of transporting cash (moved by armored vehicles) as one of the reasons that led to no longer accepting cash payments. “The transfer of money in digital form is a better choice for the environment”. Furthermore, there is the issue of fiscal transparency. “When our money – adds Osmo – move through digital channels, it is impossible to hide them to avoid taxes. We wanted our business to be as transparent as possible”.

Bank of Finland: “The cash? Will continue to be used”

The Bank of Finland denies, however, that in the “ideal” country there is no need for cash. “The Bank of Finland’s vision – underlines Heikkinen – is that even if there is a wide freedom on the agreements concerning the used payment instruments, the goods and services necessary for people’s daily needs must also be provided with cash payment “.

For this reason, he concludes, “there is a wide awareness that cash will continue to be available and used in the near future even if the use is continuously decreasing”.

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