There has been news around Denmark going cashless. The important decision taken by Denmark is that businesses such as clothing retailers, restaurants and petrol stations should no longer be legally bound to accept cash payments. This increases operational convenience - increasing security of transactions, creating a proof of payment, increased tax compliance, no price gouging, reduced infrastructure for managing the cash, need to keep cash in form of smaller notes and coins to be able to make change etc.
It is important to note the conceptual distinction between cash and currency as legal tender. A legal tender, most simply, is a medium of payment recognized by a legal system to be valid for meeting a financial obligation. (More details at Wikipedia link). Cash in form of currency notes and coins are commonly accepted as legal tender.
In many geographies, there is no "financial obligation" in a shop before a purchase is made (unless of course you break something and are responsible to pay for it). So they are not legally mandated to accept all forms of legal tender. Many stores routinely have a policy not to accept cash for large purchases, or against accepting high value banknotes. It also protects the right of a shopkeeper to refuse service to anyone, in the sense that the buyer may not insist on buying something if the seller is unwilling to sell.
In India it is common for smaller stores to not have change for a high value banknote like a Rs 1000 note. In many cases, for small change the buyer will be handed over candy for the value of small change instead of the legal tender itself.
The measure in Denmark will have to be approved by the Danish parliament before implemented.
It would be interesting to see how restaurants deal with this measure. In case of a sit down restaurant, after the meal the "financial obligation" is already existent. If cash as the legal tender is not accepted, it goes to the heart of the definition of legal tender. It appears that hospitals, pharmacies, and such essential services will still have to accept cash if tendered.
Interestingly, how do we deal with a "run on the bank" when there is no physical cash. The basic requirement for a cashless society is that entity issuing or backing the cashless medium needs to be probably a central bank. The cashless medium is a form of debt borne by the issuer of the instrument, while the cash is debt borne by the currency issuing bank.
Some links below:
http://money.cnn.com/2015/06/02/technology/cashless-society-denmark/
http://www.independent.co.uk/news/world/europe/denmark-moves-closer-to-a-cashless-society-10231995.html
http://fortune.com/2015/05/22/denmark-paper-money/
It is important to note the conceptual distinction between cash and currency as legal tender. A legal tender, most simply, is a medium of payment recognized by a legal system to be valid for meeting a financial obligation. (More details at Wikipedia link). Cash in form of currency notes and coins are commonly accepted as legal tender.
In many geographies, there is no "financial obligation" in a shop before a purchase is made (unless of course you break something and are responsible to pay for it). So they are not legally mandated to accept all forms of legal tender. Many stores routinely have a policy not to accept cash for large purchases, or against accepting high value banknotes. It also protects the right of a shopkeeper to refuse service to anyone, in the sense that the buyer may not insist on buying something if the seller is unwilling to sell.
In India it is common for smaller stores to not have change for a high value banknote like a Rs 1000 note. In many cases, for small change the buyer will be handed over candy for the value of small change instead of the legal tender itself.
The measure in Denmark will have to be approved by the Danish parliament before implemented.
It would be interesting to see how restaurants deal with this measure. In case of a sit down restaurant, after the meal the "financial obligation" is already existent. If cash as the legal tender is not accepted, it goes to the heart of the definition of legal tender. It appears that hospitals, pharmacies, and such essential services will still have to accept cash if tendered.
Interestingly, how do we deal with a "run on the bank" when there is no physical cash. The basic requirement for a cashless society is that entity issuing or backing the cashless medium needs to be probably a central bank. The cashless medium is a form of debt borne by the issuer of the instrument, while the cash is debt borne by the currency issuing bank.
Some links below:
http://money.cnn.com/2015/06/02/technology/cashless-society-denmark/
http://www.independent.co.uk/news/world/europe/denmark-moves-closer-to-a-cashless-society-10231995.html
http://fortune.com/2015/05/22/denmark-paper-money/
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