Sweden plans to be the first cashless society on earth in the near future, as the country who first introduced cash to the world in 1661 ironically becomes the first to announce abandoning cash as a whole by March 2023, and make their economy entirely digital after 362 years.
For many years, almost all of Swedish transactions have been through credit and debit cards and using contactless methods. More than 80% of all transactions in Sweden are done electronically now, making cash seem obsolete to the country. The other Nordic countries such as Norway, Denmark, Iceland and Finland seem to be following Sweden’s example, showing this is a trend that is spreading.
The fall of cash in Sweden
By comparison, the mix in other European countries is shifting, but primarily use cash and still have many cash only businesses. Scandinavian countries are leading the way however, with all payments instead being by card or by the mobile app Swish.
What is Swish?
It’s a mobile payment platform designed by the six largest banks in Sweden to make electronic payments easier for the country’s population. This became an app used by almost everyone in Sweden and is often seen as the catalyst to finally kickstart the new digital era the country has been on the brink of for some time.
The Swedish people are being encouraged by both the banks and government to use Swish over cash, with over half of the population using Swish and only 13% using cash regularly. This extends to children as well, with many over the age of seven having debit cards with parental consent and having never used cash in their lives.
One event that helped bring rise to this was Stockholm’s public transport deciding to stop the acceptance of cash payments several years ago, and instead putting in place a policy of card/app only. Customers found this to end up being a better system as it encouraged most of them to buy monthly travel cards, which are more convenient and less expensive than regular individual tickets.
Another thing that caused the fall of cash was the convenience of tourists. When cards became the norm, the need for tourists to convert their cash upon visiting was gone. Cash isn’t necessary, even in small stores, which is perfect for those travelling to the country. All Swedish vendors now have chip and PIN readers offered by iZettle or Swish payment gateways.
Losing reliance on cash also helps prevent several types of crime. Bank robberies, drug deals, counterfeiting, and tax avoidance have all drastically decreased since cash stopped being a popular source of transaction, as online payments are easier to track than cash.
What that means for us
Now that this precedent has been set, Britain will surely follow suit. Whilst cash is indeed common here, card payments are just as common and contactless transactions are on the rise. In fact, contactless payments have become more popular than standard card payments in many stores according to the payment technology company Worldpay.
This first happened in June, in which 51% of in-store transactions were contactless and rose to 52% the following month. This was a 30% jump from what it was last year.
Ever since the spending limit was increased from £20 to £30, cards have exploded in popularity. Fashion has been one category of business that has greatly benefited from this, along with betting shops and department stores. Worldpay reported that there was a boost in card and mobile app payments not only in England, but Northern Ireland as well.
The former chief ombudsman of Financial Ombudsman, Natalie Ceeney, has said that the circulation of cash throughout our society amounts to a staggering £5 billion per year and that it will reach the point where it’ll be easier for businesses to stop accepting cash. If cash were to stop being circulated and currency was to go entirely digital, this would save the government a lot of money when it comes to actually moving the money.
The future of money
Since the early 2010s, many experts on finance have analysed the future of money and analysed the stability of cashless societies. Academics have investigated multiple scenarios, leading to where the future of cash lies, and the social consequences of turning a society cashless. New payment solutions are currently being discussed thoroughly, along with just how long it’d take us to be cashless ourselves in the future.
Sweden’s new answer to this is a new concept based on their current currency, named the e-Krona, a digital currency backed by Sweden’s banks and scheduled to come into place in 2019. As one of the final steps in turning Sweden fully into a cashless society, the banks hope to have the e-Krona fully in use around the country by 2021.
These changes set a standard that can likely start a domino effect of sorts, with many more countries not far behind.
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