Financial and Monetary Systems

Sweden is on its way to becoming a cashless society

A customer withdraws money from a SwedBank cash machine in downtown Stockholm June 4, 2009. Fresh worries that Latvia, mired deep in recession, might have to devalue its currency have weighed on the stocks of some of Sweden's top banks over the past few days due to the billions of crowns worth of loans the banks have extended in the region. REUTERS/Bob Strong  (SWEDEN BUSINESS) - GM1E5641TAM01

Non-card payments in Swedish shops almost halved between 2010 and 2015 Image: REUTERS/Bob Strong

Alex Gray
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Financial and Monetary Systems

Cash is on its way out in Sweden.

Between 2007 and 2015, cash in circulation decreased by nearly 15%.

And between 2010 and 2015, the number of cash payments in shops almost halved, from 39% to 20%.

At the same time, electronic payments have surged. Ninety-five per cent of Swedes have access to a debit or credit card, and made an average of 290 card payments a year in 2015. That’s well above the EU average, at 104 card payments per year.

Image: Reuters

What’s behind the change?

There are a number of reasons Sweden is becoming a cashless society. The birthplace of Skype and Spotify, Sweden is known as a high-tech and innovative country, so it’s no surprise that Swedes are embracing digital payments.

The majority of the Swedish population have smartphones and tablets and are happy to use them for financial transactions.

In addition, cash is expensive for banks, and so, according to the Swedish national bank, Riksbank, financial institutions are just as keen as consumers to switch from cash to electronic payments. There are fewer large banks, which means that cooperation on payments is relatively straightforward.

Swedish society is also characterized by a high level of confidence in the suppliers of payment services, which makes people more willing to embrace technology.

Electronic payments are booming

The wave of ecommerce in recent years, coupled with the advent of contactless cards and payment apps, means it’s easier than ever to pay in seconds, simply by waving your smartphone over a terminal.

Worldwide, non-cash transactions reached 433.1 billion in 2015, a growth of 11.2%. The US led the way, followed by the Eurozone and China, according to Capgemini and BNP Paribas’ latest World Payments Report.

Image: World Payments Report

Consultants at McKinsey predict global payments revenues will grow from $1.8 trillion in 2014 to $2.2 trillion in 2020.

Singapore, the Netherlands and France join Sweden as some of the least cash-reliant countries in the world.

Image: Mastercard Advisers/McKinsey

Where cash is still king

That said, cash still forms an important part of the world economy.

Africa, Latin America and emerging Asia-Pacific still rely heavily on traditional money. Many poorer regions have to contend with a lack of cashless infrastructure, such as slow or non-existent internet access. In some areas, large numbers of people work outside the formal economy, where paper money still rules.

Cash may be on its way out in Sweden, but Riksbank says that “an entirely cashless society is still a long way off”.

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