Norway’s Bold Break from a Cashless Future
Oct 25, 2024
Heralded as ‘a major U-turn in the Global War on Cash’, Norway—a cashless-inclined economy—has introduced legislation ensuring everyone has the right to pay with cash in retail settings, bolstering economic inclusion and resilience.
Finance, economics and politics commentary site naked capitalism says the legislation, announced in June, passed into law this month, ‘sounding the death knell’ for signage displayed in shop windows saying ‘we only accept cards’.
The nation’s central bank, Norges Bank, details on its website how the amendment to Norway’s Financial Contract Act clarifies and strengthens the right to payment choice, noting: ‘The Central Bank Act stipulates banknotes and coins… are legal tender… Beyond this, the Act does not elaborate on what legal tender implies.’ The recent amendment to the Financial Contracts Act provides clarification.
In sales premises where a business regularly sells goods or services to consumers, the consumer shall be offered the option to pay with legal tender if it is possible to pay for the goods or services with other payment solutions in or in immediate connection to the sales premises. If the business has available change, it must also offer to provide change in connection with the payment, unless there is a clear discrepancy between the banknote offered as payment and the amount to be paid.
It goes on to specify that the first and second sentences do not apply to vending machines or sales in unstaffed premises, or to amounts exceeding 20,000 kroner ($1,850). Norges Bank adds that a sanction in the form of an administrative fine may be imposed should businesses ‘wilfully or negligently violate the rules.’
naked capitalism highlights two driving forces behind the legislation, with the first being financial inclusion. Designed with usability in mind, cash is accessible to all, imposing no credit checks or age requirements that can limit other payment options. Its physical nature also incorporates features making them easily distinguishable (e.g. different sizes of banknotes or coins) to support people with visual impairments or learning disabilities.
The second key factor is resilience. Cash doesn’t crash. It enables payments offline, anytime, anywhere and by anyone. July’s worldwide IT outage disrupted everything from transport and telecoms to banking and payments, and was a stark reminder that anyone—even the staunchest card or payment app advocate—can find themself in need of cash. There are obvious benefits to a country in ensuring citizens have a way to pay offline and off-grid, should services be disrupted due to natural disasters, cyber incidents or deliberate attacks.
In a recent video, Erik Thedéen, governor of neighbouring Sweden’s central bank, spoke on the importance of cash to national preparedness and called on everyone to use banknotes and coins from time to time, to ensure retailers understand there is demand for cash and it must continue to be supported.
Fortunately, thanks to Norway’s new law, retailers there will be left in no doubt that cash matters.