Denmark has moved one step closer to becoming the world's first cashless society, as the government proposes scrapping the obligation for retailers to accept cash as payment.

The Danish government has said that as of next year, business such as clothing retailers, restaurants and petrol stations should no longer be legally bound to accept cash payments.

The proposal is part of a package of economic growth measures, which are being released ahead of this year's Danish election. It aims to reduce costs and increase productivity for Danish businesses.

Finansrådet, a Danish finance industry lobbying group, says the change would free retailers from the cost of security, and the burden of managing change and notes.

Annoying pocketfuls of change are a thing of the past in the Nordic countries, where card payments for the smallest items are commonplace. (Photo by Clive Rose/Getty Images)

Although it seems like a drastic step, the Danes are already moving away from paper and metal money.

Almost a third of the population uses an official Danske Bank app called MobilePay - it links your mobile to other users' phones or to a sensor at the till, allowing you to confirm payments with a simple swipe on your smartphone's screen.

Similar technologies like Paym are available in the UK, which allows users to transfer money to others by entering their mobile number. Google Wallet turns your phone into a contactless card, allowing you to tap your device against readers to transfer money - however, it is currently only available in the USA.

But both of these technologies are still yet to see the level of adoption that MobilePay has in Denmark.

There are fears that moving to totally cashless payments could increase the risk of fraud - in Sweden, a nation with one of the highest numbers of bank transactions per person in the European Union, cases of card fraud have doubled in the last decade.

However, Danske Bank has taken steps to fight fraud, by linking individuals' MobilePay accounts to their national insurance numbers.

The change would need to be approved in a vote at the Folketing, the Danish parliament, but the timing of the vote has not yet been set.

However, in a country where cashless payments are so common, it looks unlikely that the proposal will face much opposition.

Cashless payments are growing in popularity in developing nations, as it removes costs associated with handling cash and lowers the danger of theft or extortion. Kenya's 'beba' system, seen here, allows users to transfer money via their mobiles. (SIMON MAINA/AFP/Getty Images)

The Nordic countries of Denmark, Sweden, Norway, Finland and Iceland lead the world in cashless payments - cashless payments for even the smallest items, such as a packet of chewing gum, are commonplace.

In 2013, a Swedish bank robber left empty-handed, after he found out that the Stockholm bank he held up did not carry any cash.