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/   Insights

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/   Insights

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/   Insights

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/   Insights

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/   Spotlight

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/   Spotlight

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The death of cash – stark reality or merely an urban myth? It depends a huge amount on where in the world you are talking about. Cash is still dominant in most developing markets, and even in places like the US, paper money still accounts for most consumer payments by volume.

Turn to Sweden, however, and it’s a very different story. Here the country has set its sights on becoming the world’s first truly ‘cashless’ society, and new research suggests that this is more than just a pipe dream. A study from Stockholm’s KTH Royal Institute of Technology says the country’s embrace of electronic payments means it’s set to ditch cash in the near future.

In particular, study author Niklas Arvidsson, a researcher in industrial economics and management at KTH, believes the growth of mobile payment systems like Swish is hastening the demise of cash in the country. “Cash is still an important means of payment in many countries’ markets, but that no longer applies here in Sweden,” he explained. “Our use of cash is small, and it’s decreasing rapidly.”

The research notes, for example, that the number of Swedish crowns in circulation has fallen from 106 billion six years ago to around 80 billion today. Of that, only between 40 and 60 per cent is in regular circulation. Even Sweden’s homeless magazine sellers have to accept cards because no one carries notes or coins.

Arvidsson is not a recent convert to the cashless cause. A report that he authored in 2013 estimated that Sweden could be cashless by 2030.

Push and pull

A range of factors seems to be at work. On the one hand, there are new platforms being embraced by tech-savvy Swedes. Swish is an important part of this. The system, which offers real-time, person-to-person payments, is the product of a collaboration between major Swedish and Danish banks.

The country’s four largest mobile phone operators have also launched a joint mobile payment system called WyWallet that offers 97 per cent of the country’s mobile phone users immediate access to mobile payments.

Of course, other nations have similar payment platforms, so why is Sweden seen as becoming cashless?

One reason is that Sweden’s banks are pushing strongly to remove cash from the system. Partly because of the sheer cost of cash, partly because of ultra-strict money laundering rules, cash is just not wanted anymore. Big banks like SEB, Swedbank and Nordea Bank have stopped manual cash-handling services in the vast majority of their local branches. If you want cash, don’t go to a Swedish bank teller for it. They will send you to an ATM. But, as RBR reports, even the number of ATMs is shrinking across country.

The KTH study notes that several banks have 100 per cent digitalized branches that will not accept cash. “At the offices which do handle banknotes and coins, the customer must explain where the cash comes from, according to the regulations aimed at money laundering and terrorist financing,” says Arvidsson.

Number one?

A MasterCard report put Sweden among the world’s top six countries for electronic – ie non-cash – payments. It found 89 per cent of the value of consumer spend was cashless, with paper money not only accounting for a small percentage of the value of consumer transactions, but also a small percentage of the number of transactions.

But it’s not the closest to becoming cashless just yet – France, Canada and Belgium all do better than Sweden in terms of non-cash payments’ share of the total value of consumer payments.

However, there is an appetite and the political will in Sweden to go beyond relegating cash to alternate status – the country seems willing and able to go completely cashless. Although, there is still somewhere between 40 and 60 per cent of that SEK 80 billion that, as Arvidsson says, is “socked away in people’s homes and bank deposit boxes, or can be found circulating in the underground economy”.

In 1661, Sweden’s central bank was the first in Europe to issue paper money. Now it seems like it will be the first to ditch cash.


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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.