How is a country becoming the world's first cashless society? Sweden, one of the most technologically advanced nations on the planet, is leading the way.
Sweden is expected to become the world's first cashless society by March 2023. By then, cash will not be accepted any longer as a means of payment in Sweden.
Sweden has always been one of the first countries in embracing new technologies. There is a tradition in Sweden about being the first. This is noticeable throughout the Scandinavian country's history. And its financial system is not the exception.
In 1661, Sweden was the first country in Europe to introduce banknotes. In 2023, Sweden is becoming the first cashless nation in the world, with an economy that goes 100 percent digital.
Sweden: World's first cashless society by 2023
It took Sweden 362 years to transition from being the first nation in Europe to adopt banknotes in 1661, to becoming the world's first cashless economy in 2023.
For the past years, in Sweden, almost all purchases have been paid electronically, by debit/credit card using chip and Pin rather than the old-fashioned magnetic band, using contactless technology, or the mobile application Swish especially designed to help Swedes embrace a cashless life.
This means, now more than 80 percent of all retail transactions have been conducted electronically. This is similar in the rest of the other Nordic countries which include Finland, Norway, Denmark, and Iceland.
The way the Nordics are quickly embracing a cashless lifestyle strongly contrasts with the countries in the south of Europe, where cash is still a strong form of payment and with several places accepting only cash. This is the complete opposite of what happens in Northern Europe where cash is no longer accepted in many establishments.
Moreover, in Sweden, businesses, where cash is still accepted today, are going to stop accepting cash in 2023.
It is very difficult already today to find an establishment where they accept cash. You have to be ready to pay by card or by the mobile application Swish.
In 2012, the six largest banks in Sweden got together to build an instantaneous mobile payment platform to help customers make electronic payments easier. The application, called Swish, developed as a collaboration, was embraced and used by everyone in Sweden.
Both banks and government encourage citizens to adopt the cashless economy. Swish is close to becoming the Swedish standard for mobile payments. The application is used by way over half of the population in Sweden. Only 13 percent of the total population in Sweden rely on cash.
Children are also part of the transition. Some of them will never know how it was like to live in a world where cash transactions were widely accepted. Some of them are going to see printed money only through photos, videos, and museums.
Swedish banks issue debit cards to citizens aged seven years of age or older (with parental permission), which translates to more than 97 percent of the population. This introduces them to the cashless society that will be part of their future.
There is no need for carrying cash in Stockholm today
Cash accounts for less than 1 percent of the total transactions in Sweden. Cash transactions are heavily discouraged. More than 99 percent of merchants accept debit cards, and consumer payments with cash are less than 20 percent of total transactions. Over 80 percent of all transactions are cashless, an increasing trend.
Several years ago, Stockholm's public transport stopped accepting cash. Tickets are pre-paid, paid by using a mobile application, or bought by debit/credit card from the driver, or a ticket machine. Residents usually buy a monthly travel card, which is both more convenient and less expensive than buying individual tickets.
In an increasing number of stores, signs read "No cash payment in this store."
Most Swedes, especially those in the younger generations, never carry cash. Visitors don't need to worry about currency exchange either. Yet, some tourists find it hard to believe they don't need any local currency when visiting Sweden. The fact is, cash is really hard to find and see.
Cash is never needed, not even for small purchases like a hot chocolate at a Christmas market in Stockholm. All vendors have a mobile payment chip-and-PIN card reader such as the one offered by Stockholm-based mobile payments company iZettle, or they accept payments by the mobile application Swish. Swishing is perhaps the easier way of payment for everyone.
A practical reason for a cashless economy: Crimefighting
Some of the reasons to move away from cash include making transport more secure, which has already been accomplished in the Swedish capital, and reducing bank robberies and drug, counterfeiting, and weapons markets.
It also means less tax avoidance. Bank robberies have considerably decreased in the past years; since there is no cash in most banks in Sweden anymore. Establishment owners feel safer without having any visible cash.
The future of money
The future of money and the analysis of the development of the cashless society which includes the analysis of the means to achieve it and the analysis of the challenges and benefits it can bring, have been studied and discussed by academia on a regular basis in Europe since the early 2010s.
Academics investigate the cashless society from multiple perspectives. Topics of discussion include cash in the future and the social consequences of a cashless society.
Other topics include new payment solutions as disruptive technologies, emerging payment technologies, emerging payment business models, biometric payments, integrity, and privacy, and the design of new payments and technologies continue emerging.
The introduction of the Swedish e-Krona
Sweden's Central Bank is testing with plans to introduce its own digital currency: The e-Krona, a digital currency backed by the Central Bank that could accelerate the country's cashless society. The e-Krona pilot scheme starts in 2019. The Swedish digital currency will be implemented throughout the country in 2021.