Will Sweden become the world's first cashless country?

Sweden is on track to become the first completely cashless society, due to the country’s embrace of technology and a crackdown on organised crime and terror, according to a recent report.

Niklas Arvidsson, a research in industrial economics and management at Stockholm’s KTH Royal Institute of Technology, says that the widespread and growing embrace of technology, including mobile payment system Swish is helping to bring Sweden closer to replacing cash completely.

“Cash is still an important means of payment in many countries’ markets, but that no longer applies here in Sweden,” he says. “Our use of cash is small and it’s decreasing rapidly.”

The Swedish routinely use bank cards for even the smallest of purchases an there are now less than 80 billion Swedish crowns in circulation – a sharp decline from just six years ago when the total in circulation was around 106 billion.

“And out of that amount only somewhere between 40 and 60 per cent is actually in regular circulation,” Arvidsson adds. The rest is stored in people’s homes and bank deposit boxes, or can be found circulating in the underground economy.

Our use of cash is small and it's decreasing rapidly.

Perhaps the main reason that Sweden is moving towards a completely cashless system is Swish, a direct payment app that is used for transactions between individual, in real time, that is the result of collaboration between major Swedish and Danish banks. On top of this, digital payments are accepted almost everywhere – from bus fares to street magazines. The Swedish Federation of Trade also claims it is ‘leading the world in cashless trading’.

Read: How developing economies are going cashless

But data from the European Central Bank indicates that Sweden might not be the cashless utopia they would have you believe. The data shows that while the Swedes are enthusiastic about bank cards and digital payments, they still regularly withdraw quite a lot of money from ATMs and surveys from the Riksbank sow that for transactions under 100 kronor (around £10), 41 per cent of people still prefer to use cash. And the Swedish National Pensioners’ Organization, which represents 400,000 of the country’s elderly says that seven per cent of its members never use bank cards, let alone other digital payment services.

There are of course potential obstacles to going completely cash-free too, including rising fraud rates, discomfort about personal electronic footprints, the issue of accommodating tourists and reliability.

What happens when your digital payment system breaks down in a cashless society? That exact issue happened at one of Sweden’s first cashless music festivals last summer, causing mild chaos and people to resort to using old-fashioned IOUs. While that might have worked on a short term basis to solve the issue at the festival, it’s not something that would be a feasible solution across society if a cashless economy broke down.

Whether Sweden will achieve Arvidsson’s vision of a cashless country is yet to be seen, but it’s certainly much closer than many other developed countries.


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