May 6, 2015 / 2:25 PM / in 3 years

Denmark proposes cash-free shops to cut retail costs

COPENHAGEN, May 6 (Reuters) - The Danish government on Wednesday proposed getting rid of the obligation for selected retailers to accept payment in cash, moving the country closer to a “cashless” economy.

Nearly a third of the Danish population uses MobilePay, a smartphone application for transferring money to other phones and shops, and Sweden, Denmark and Finland lead in credit card payments per inhabitants in the European Union.

The government said as of next year, businesses such as clothing retailers, gas stations and restaurants should no longer be legally-bound to accept cash.

The proposal is part of a pre-election package of economic growth measures aimed at reducing costs and increasing productivity for businesses. It would need to be approved by parliament although the timing of a vote is as yet unknown.

The proposal is unlikely to meet much opposition in Denmark, where it is common to use debit or credit cards for the smallest of payments, such as a pack of chewing gum at a convenience store.

Financial institution lobbyist Finansraadet said going cashless would save shops money on security and time on managing change from the cash register.

However, there are some fears that a complete move to electronic payment may increase the risk of fraud. In Sweden, for example, such cases have doubled in the past decade.

Denmark’s biggest bank and owner of MobilePay, Danske Bank , has taken steps to prevent fraud by linking the app to NemID, a digital signature linked to the Danish equivalent of individuals’ social security numbers.

Microsoft founder and former CEO Bill Gates is a vocal supporter of the movement towards cashless societies and argues it would encourage banks to provide services to the world’s poorest, due to the low marginal costs. (Reporting By Alexander Tange; Editing by Sabina Zawadzki and Janet Lawrence)

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