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. Last Updated: 07/27/2016

aFinns Launch Cash-Card System

HELSINKI, Finland -- Sorry. Cash is not welcome here.


This sparsely populated and wealthy Nordic country, already a world leader in applying high-tech cures to the stresses of modern life, has embarked on a nationwide plan to rid itself of annoying coins and bills.


In their place, banks this month began selling multipurpose rechargeable smart cards that can be used to pay for purchases as small as a candy bar and can be topped-up with a quick visit to an automated-teller machine.


Cash is just "terribly expensive" to deal with, said Tapani Pentilla, director of the Automatia company that developed the new "Avant" card for Finland's three largest retail banks.


The so-called "electronic wallets" are a step beyond cash-withdrawal cards popular in the United States and the debit cards prevalent in much of Western Europe.


Money, or monetary value, is actually stored on the card, not in the bank's own accounting system, and can be increased electronically. The card also keeps track of how much money it has left for spending. To see the balance, a card owner can insert it into an electronic ledger, about the size of a cigarette lighter, that will display the date and amount of each purchase.


Distribution of the new money cards began last week. By the end of the year, the banks expect to have sold 500,000. In three years, almost every adult Finn is expected to have one. The quantity of cash in circulation could drop by half.


Postipankii Bank General Director Matti Inha, one of the country's biggest boosters of the notion of a cashless society, predicted that Finns soon will conduct all their transactions with a single card that functions as a credit card, a debit card and as a cash equivalent.


Conducting business in paper money is already a bit passe. Checks are not used at all. At the demand of trade unions, all salaries are paid directly into workers' bank accounts. Social benefits are made by electronic transfer and most bills are paid that way.


"It's very difficult to live in Finland without a current account in the bank," Inha said. "Even if you're unemployed, you still get your government payments directly transferred into your back account."


That means that even Finns who are considered bad credit risks are given access to ATMs -- but their withdrawals are strictly controlled.


Finland, a land of saunas, birch trees and vodka, is a trailblazer in technology. It has the highest per-capita use of ATMs, with 4.5 million ATM cards held by a population of only 5.1 million. It has one of the developed world's lowest rates of cash in circulation. Six out of 10 Finns access the Internet regularly, one of the highest utilizations in the world and twice the per capita rate in the United States. It has the highest per capita use of cellular phones.


Although proud of being pioneers, the Finns admit that going cashless isn't for everyone. After all, cash has a certain appeal, especially to the criminally minded. It can be hidden from the tax man, laundered to disguise its source and passed under the table in bribes. Moreover, guys who want to show off can flash their rolls of cash or peel off a few big ones in public to demonstrate their wealth.


"We don't really have 'gray' money in our economy," Pentilla said delicately. "You in America might be more resistant to this system."


The Finnish bankers also said their customers have a different etiquette. Displaying one's cash is becoming a bit, well, tacky.


"The style in Finland is to have only one, or at the most two, smart cards," Inha said. "That is considered more fashionable."


Banks, of course, like electronic payment systems because they can make money on the "float," which is like an interest-free loan of customers' money. With the new Finnish system, they also will pay out less interest on deposits because customers' money will be on the card, not in the banking system.


The only hard sell may be to get Finns to pay for the money card, which will cost the equivalent of about $7 for a card with a life of two years. "People do tend to think that when you're buying your own money, you shouldn't pay," Pentilla said. "But we don't think people will resist for long."