A Nation Without Cash: Norway’s the First Country to Go Cash Free

Developed countries are migrating towards cash-free societies; such a statement is undeniable. Before the invention of the credit card in 1950, everything was cash-only. Now, the introduction and surge in popularity of mobile payments such as Apple Pay have resulted in many people realizing that fiat money* is something they could potentially do without. Cash will be around in most societies for many decades; however, some nations are already well on the road to going entirely cash free. One of these nations is Norway.

I lived in Norway for a year before coming to Princeton; I didn’t use cash once. Not only did I never use cash, but I never even had it in my wallet. Everything is done electronically. I was not alone in this experience: the majority of Norwegians, particularly the younger generation, simply don’t use cash anymore. As of last year, Norway’s cash levels were under 5%, and this percentage is falling rapidly.

The primary reason for this is that Norway’s two largest banks, DNB and Nordea, have stopped accepting and offering cash transactions. DNB, Norway’s largest banks, has publicly stated its desire for the nation to go cash-free. The fundamentals are already in place for this to occur: Vipps, DNB’s mobile payment app, is already being used by over 40% of the Norwegian population. The most striking example of the use of Vipps is that if you walk down the streets of Oslo, Norway’s capital, instead of seeing homeless people holding a cup and asking for change, all you see is a sign next to them with their “Vipps” details. People donate by sending them money electronically since most now have no cash to give.

Norway’s politicians are pledging that Norway goes completely cash-free, and if it does, it may be the first country to do so (although their neighbours Sweden are not far behind). But what is the point of going cash-free? The core economic reason is that in a cash-free society, tax evasion and money laundering becomes exponentially more difficult. Although the informal economy isn’t notoriously large in Norway, tax evasion is comparatively more a problem, so this will be much easier to regulate if every transaction can be observed by banks. The second and more general reason is that not using cash just makes life easier. Instead of trying to use all the small pennies you have in your wallet to pay for a good, you always pay exactly what the good costs, and nothing more. Additionally, if all your payments are made with electronically, then you have a much better understanding of how much money you have at a given time, since everything is centralised in one place.

A cash-free society would be historic, and other nations would almost certainly look to follow suit. In fact, the United States, although still heavily reliant on cash, is inching slowly but surely towards going cash-free. The benefits in America’s economy would be huge. Tax evasion and the informal economy would be much easier to keep taps on, and society itself would simply function more smoothly. Although the day cash is used for the last time In America is many years away, it is coming. And it may well be coming faster than you think.

* = Fiat money is inconvertible paper money made legal tender by a government decree.