Sweden’s Evolution Toward a Cashless Society

Several of the Country’s Banks No Longer Accept Cash

Swish_lSweden is moving toward a cashless future, and is only one of a few countries in the world to be doing so.

In November 2015, we wrote about Sweden’s Swish (see Daily Insight: Swedish Swish) — a popular form of mobile payment now used by more than one third of Sweden’s population. Such services are seeing a slow start in many markets, but Swedes have become comfortable with “swishing” cash between themselves.

In 1661, Sweden was the first European country to introduce bank notes. Now the Nordic country has come full circle, and is on the path toward phasing out paper money. Several of the country’s banks no longer accept or dispense cash other than from machines. Paying via app or plastic has made going digital truly convenient for consumers.

Debit and credit cards are still the most common way to make payments at point-of-sale terminals, though more and more Swedish individuals and businesses have been moving to apps like Swish. These let users securely send money to one another in real time via a registered receiver’s mobile phone number. Swish was started by a consortium of Swedish banks, and gained popularity as an easy way to make person-to-person payments.

Fewer cash transactions mean that bills and coins now represent just 2 percent of Sweden’s economy, compared with 7.7 percent in the United States and 10 percent for territories using the euro.

In 2015, only 20 percent of all consumer payments in Sweden were made in cash — far below the average of 75 percent in the rest of the world. More than half of the branches of the country’s biggest banks are ordering for cash dispensers to be dismantled by the hundreds.

Such strong adoption of electronic payments in Sweden has alarmed consumer organisations, which warn of a rising threat to privacy and increased vulnerability to sophisticated Internet crimes. Sweden’s Ministry of Justice cited that electronic fraud in 2015 had doubled from a decade ago.

Sweden has become a leader in mobile payment thanks to the country’s high smartphone penetration and tech-savvy population. Cards are established and easy to use, but Swedish banks have developed a system supporting fast and free person-to-person payments.