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Wednesday, July 17, 2024

Suddenly cash was king again

Norwegians’ aversion to using cash recently wound up costing merchants dearly and frustrating customers. When electronic payment systems suddenly broke down all over the country on a traditionally busy shopping day, cash reigned as the only way of making purchases – and spurred warnings from state officials that everyone should still have some cash on hand.

Norway’s central bank recently introduced some new and particularly handsome cash, but Norwegians haven’t been using it much. Monday’s payment system breakdown may now prompt them to keep more cash on hand. PHOTO: Norges Bank

It was the day before Norway’s huge Constitution Day holiday on the 17th of May, when grocery stores, florists and not least the state wine and liquor monopoly Vinmonopolet were packed with customers. At around noon, the so-called “bank terminals” used for payment by card either slowed way down or stopped working entirely. It simply wasn’t possible to use bank cards to buy bubbly for 17th of May parties or anything else.

Nets Norge, the nationwide system that runs the terminals, blamed “an internal technical error” on the payment snafu that lasted for nearly two hours until the error was corrected. Around 130,000 of the portable boxes used for card payments were affected and Nets Norge issued a public apology.

“We will review our procedures and see how we can improve them,” Peter Glüsing, spokesman for Nets Norge, told TV2. He had to acknowledge chaotic consequences of the error that led to long lines first at check-out counters in retail outlets and then at automated teller machines (ATMs, or minibank in Norwegian). ATMs have also been disappearing around Norway along with bank branches themselves, a result of Norway’s aggressive digitalization and automation of most all types of services.

It was remarkable how many people simply had no cash on them. Use of cash has long been discouraged by state tax authorities in Norway, who want electronic records of most all transactions in order to battle the black market. Increasing numbers of merchants don’t even accept cash, citing security issues and the expense of handling it.

Then came the Corona crisis, when cash was viewed as a possible source of virus transmission. That was later discounted, when researchers determined that any virus on cash or coins disappears after just an hour, but it provided a perfect excuse for merchants and the state to discourage use of cash or even refuse to accept it, also for small purchases.

Norway’s central bank has insisted, meanwhile, that cash remains legal tender and merchants are obliged to accept it. Most Norwegians, especially the young, have all but stopped using cash, to the point that teenagers going through civilian or church confirmation ceremonies don’t want cash gifts any longer. They prefer electronic deposits directly into their own accounts.

‘Wake-up call’
Monday’s chaos “should be a real wake-up call” for everyone, claim officials, especially given the risks of cyber warfare and attacks on banking systems. State preparedness experts in Norway have already issued warnings that all households should have enough cash on hand to pay for food and other necessities for at least three days.

“Everyone should evaluate how they’d handle a situation in which they lose access to important goods and services,” Agnar Christensen of the state directorate for security and preparedness (DSB) told Norwegian Broadcasting (NRK). Cash can still be the only way, he notes, to purchase necessary items if banking systems break down.

“We haven’t proposed an exact sum, because needs vary among individually,” Christensen added, and he cautioned against having large sums of cash at home. It can be wise, however, to carry some cash at all times, despite all the newspaper editorials and commentators who’ve recently claimed that cash is “old fashioned” and that merchants shouldn’t have to accept it. Monday’s incident suggests otherwise.

“We’re usually and fortunately protected against this type of major error,” Pål Andre Fredriksen, director of Verifone, told NRK. “This was the first time I have experienced payment terminals being down for so long, and that so many were down.” Security and cash transport agency Nokas reported that Norwegians ended up withdrawing 10 times as much cash during the period that payment systems were down as they did on May 16th last year. Now they may start withdrawing cash more often. Berglund



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