One of the pillars of accepting physical cash for payments of debts is that government accepts cash at all times for tax payment. And generally, government does not charge for that. Here in the Netherlands however, our Tax Office informs usthat as of November 2003, the free payment facility at post offices will no longer be continued. Anyone who pays to the Tax Office will have to pay for the payment itself. Or they can choose to send in the acceptgiro for debiting their current bank- or giro-account, but this may result in charges by the bank.
Now, what's relevant here, is the fact that government starts charging for cash. This can be no other than the beginning of the end of cash as we know it. How can such a government demand that other players in the market (banks, retailers) do not charge for the use of cash (or worse: continue providing payment services for free)? Or as we say: if there's one sheep over the fence, others will follow soon.
The end-result will be that in five years time we will actually see quite a number of retailers and banks agressively steering towards non-cash payments. The security and cost issues for those who handle cash will eventually lead to a proper pricing and elimination of this previously government sponsored product. And the losers in the game, the central banks, will undoubtedly find other ways to generate income (via direct or indirect taxes).