In Sweden, cash is no longer king

When you ask people on the shopping streets of Stockholm when they last paid for something in cash, many have to think a bit. Was it yesterday, or perhaps last week? Digital payments via card or mobile app have become so widely accepted that many Swedes no longer carry cash at all. Indeed, there is such a high level of trust in the digital transaction system, that even children often pay with their debit cards.

According to a recent study from KTH-Royal Institute of Technology, Sweden can currently claim to be the world’s leader in cashless trading. “Our use of cash is small, and it’s decreasing rapidly,” says Niclas Arvidsson, researcher and author of the study.

“Cash is still an important means of payment in many countries’ markets, but that no longer applies here in Sweden.”

“In the retail industry (in Sweden), about 80% of all transaction are made by cards, and 20% in cash, and this number is increasing”, says Bengt Nilervall, Head of Payment Systems, Swedish Trade Federation. “We have a big trust in the government, the system, the banks, and the authorities.”

According to the KTH study, in Sweden there is less than 80 billion Swedish crowns in circulation (about 8 billion EUR) a sharp decline from just six years ago, when the total was 106 billion.

For most private consumers, being able to pay with a card or via the very popular mobile payment app Swish, is convenient, secure, and free. Cards are used for purchases both small and large, and there are many instances where only digital payments are accepted.

Of course not everyone has a smartphone or debit card, and there are groups in society that may not be as receptive to the idea of a cashless society, for example the elderly or rural population. There are also those who disagree with the loss of privacy and freedom in a system where all monetary transactions can be tracked.

On the retailer side, it seems most welcome the security and convenience of cash free sales. For small businesses and street vendors, the Swedish iZettle mobile payment solution for cards, or mobile app Swish, allow for easy payments. As with traditional credit card transactions however, the new digital solutions are also starting to charge fees for businesses, frustrating some vendors who must cover such costs, even for small purchases.

What is clear though on the streets of Stockholm this holiday shopping season: cash is scarce and cards are king.

Financial experts predict Canada, Denmark and Australia to follow the trails of Sweden and accelerate towards becoming genuine cashless societies in 2016.

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