Cash or card?

The flicker of panic in a young cashier’s eyes when having to accept a thousand kroner note from a customer will soon be history. From June 2025, Denmark’s biggest bank note will no longer be valid, and will not be replaced. According to the National Bank of Denmark, the bank note is being phased out because fewer Danes use cash, and furthermore, thousand kroner notes are the preferred variety among money-laundering criminals. 

However, the National Bank of Denmark also emphasises that it has no intention of turning Denmark into a cashless society. In fact, the bank is currently going through the responses of 75,000 Danes, who have participated in a survey about which motives they would prefer on the new series of 50-, 100-, 200- and 500-kroner notes that will be introduced from 2028/2029.

According to Professor Jonas Hedman, who has studied digitalisation at CBS since 2007 – including means of payment and the cashless society – the phasing out of the thousand kroner note is one of many consequences of digitalisation. However, in his opinion, the decision to replace current bank notes with a new series signifies the ambiguity surrounding the role of cash in society. Good for small payments but not for large installments. He also points out, this decision may have a different effect than the one politicians expect it to have. 

“The replacement will most likely accelerate the transition to a cashless society. Even if it’s not intentional,” says Jonas Hedman. 

Cash will be taken out of circulation 

The phasing in of new bank notes renders bank notes older than the 2009 series with depictions of bridges and prehistoric finds invalid as of summer next year. If people still have old notes lying around, they should hurry down to the bank to exchange them for newer ones. And as far as the thousand kroner note is concerned, it will have to be exchanged for smaller notes. 

“But typically, most people won’t go to the bank to exchange their old bank notes for new ones. Instead, they’ll put the money into their bank account. And then most of them won’t return to withdraw the money again. On the contrary, they’ll use the money digitally. Which means that lots of cash will be taken out of the cash flow. We saw the same thing when Sweden introduced new bank notes back in 2015-2016,” Jonas Hedman explains. 

The exchange of bank notes is related to both security and quality. However, Jonas Hedman does not expect the new notes to be filling up many a trouser pocket. 

“Bank notes will be around for a long time because there is no political desire to terminate them. But in a few years, cash will have next to no practical function in society. Personally, I believe that bank notes will only play a part for small niche groups,” the researcher elaborates. He also has a request. 

User-friendly solutions are required 

He is calling for better digital payment solutions than the currently available. Solutions that take into consideration those who do not have digital ID (MitID), who are digitally weak or who suffer physical impairments that render them unable to pay using a card or mobile units. 

“We should develop an alternative to MitID. A more user-friendly solution than the current one. And preferably one that is also robust in the face of crisis,” he says. 

Lately, the risk of hackers attacking our power supply or the internet has become part of the discussion about a cashless society. But according to Jonas Hedman, it is far from the most prominent discussion point. 

“There is only a very small risk that the power will be cut all across Denmark for several days. But if it were to happen, your tinned tomatoes and your friends will be of more use to you than cash. Because helpful friends and being able to borrow necessities will be much more effective than having the cash to buy stuff with,” he elaborates. 

Very little experience

Jonas Hedman refers to the fact we would most likely witness the arrival of an off-the-grid market in step with prices going up and the emptying of supermarket shelves. 

In addition, he also points to the fact that the electronic doors, refrigerated counters and lights in shops would not be working either. 

“But in reality, we only have very few experiences with those types of power cuts in Western societies,” he states. 

However, should the internet be hacked, it would still be possible, to some extent, to pay with both cash and cards. Because in Denmark, you can pay with your credit card offline. The National Bank of Denmark has previously estimated that with moderate spending, we should be able to use our credit cards for offline payments for about ten days. 

Costly for shops

According to the National Bank of Denmark, we use cash in 11 per cent of our physical transactions. More than half – 57 per cent – of all cash payments are made in grocery shops. 

Shops are obliged to accept cash payments, but in the spring, the Danish Folketing decided to lower the amount a customer is allowed to pay in cash, which is now DKK 15,000. Though, this step should first and foremost be regarded as an attempt to limit whitewashing. 

“Naturally, a cashless society would be advantageous for business owners. Individual service transactions take longer, when payments are made in cash. And it takes time to count the cash each night and to make sure you have enough change,” Jonas Hedman concludes.