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Iceland the Cashless Society

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I’ve been seeing lots of chatter regarding virtual currencies, location based social media incentives and monetizing your network, but what if we really went cashless as society? What would this mean and how would we do it? In spending time in Iceland, I see their model as one to emulate.

In one week in Iceland, I’ve found it unnecessary to complete a currency exchange credit cards (visa/mastercard, not American Express) is accepted everywhere. Here’s some of the more unique places

  • A fellow traveler I met in the hostel paid his speeding ticket (it’s 245 Euro should you be interested) on the spot
  • Chewing gun at a gas station
  • Daytrip hike

Here’s why it works in Iceland

  • NO transaction charges paid by consumer
  • Portable credit card machine for quick transactions
  • Most transactions as debit in nature
  • Iceland has the technology advances to support this (most digital country in Europe)

This has me thinking about why United States would emulate such a program

Benefits

  • Eliminate the need for the Treasury to print costly bills/coins
  • Allow for the government to collect tax revenue in real time
  • Give people the power to truly see their spending habits

Iceland is a highly educated (30% of the population have college degrees), forward thinking nation with a small population (b/w 280K to 320K). What works there won’t work in the US, but I do feel we can implement this

Challenge #1

Retailers will balk at paying transaction fees for low profit items such as a stick of gum

Solution: Set a min price where visa/mastercard/amex can start charging transaction fees such as $25. Credit card companies are incentived to get their customers to use their cards more, the logic being if they’re using a Capital One Visa card for a stick of gum they might for a new bedroom set

Challenge #2

Americans have far too much credit card debt.

Solution: Encourage consumers to use debit cards and offer realtime balance information before and after they make a transaction. Put limits on how much they can charge. Do not allow overdrafts.

Opportunity

With Smart Phone penetration approaching 50%, why night eliminate bulky credit cards and offer the use of cell phones to make transactions. Why not have visa/mastercard/bank apps that allow consumers to make purchases directly. This if environmentally friendly since instead of print paper, transaction information is processed directly in the phone. Social media companies/retailers benefit because consumers can instantly choose to share their purchases with their network.

These are just a few of my thoughts


Written by Derek Reese

June 5, 2010 at 3:41 pm

Posted in Uncategorized

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