How the Swedes abandoned cash
Around 2023, most Swedes won’t be using cash. We asked “Mr digital wallet”, INDEK’s Niklas Arvidsson, why Sweden is moving towards a cashless society when the use of cash is increasing in some countries.
“Many people outside Sweden ask why the state, the Riksbank or the banks have decided to go this way. But it's not that simple. There are many things leading up to where we are today: technology, legislation, behaviors, business models, events… ”
Below Niklas Arvidsson guides us through the milestones over the past 20 years that have paved the way for an increasingly cashless society.
The road to the Swedes' digital wallet
The Swedes' digital journey towards an “empty wallet”, begins around year 2000. The fundamentals are in place: most Swedes have a bank account linked to a card. We can pay our bills via internet bank or fill in payment orders and send them by mail. Also: we have a technology friendly mindset and are good at adopting to innovation.
2002– The Riksbank privatises cash management, and Tumba Bruk, which manufactures Swedish cash, are taken over by American Crane. Thus, the Riksbank get rid of money transports to and from banks and retail companies, stops managing ATMs and all the costly security risks that surround handling cash. Now private companies – banks and security companies – take care of the cash. But the banks which don’t make money on cash transferals slowly pull out of these services, whilst the consumers find other ways.
First half of the 00s With ATMs, internet payments and deposit machines, the banks stop investing in cash management.
Niklas: “Managing cash was a way of getting customers into the bank offices in order to be able to sell other, more profitable products and services. But as the incentives disappeared, a downward spiral for cash began."
Mid-00s A wave of robberies, for example among money transports and in the public transport, stirs up emotions among unions from several branches and raise the question of cash as a work environment problem.
Niklas: “SL was first to ban cash. Their buses could have an end station far out on the countryside, they carried an attractive amount of money and were thereby an easy target. The union for bankers had representatives posted by the ATMs and asked users what they needed cash for. This created a debate in Sweden about cash."
2007– The use of cash peaks. When the Christmas shopping starts, the amount of cash circulating is higher than ever.
2007–2008 When RUT and ROT are introduced, tax reductions aimed encourage people to hire “white labour” for household services, it further reduces the amount of cash exchange between people.
2010– ”The Cash Register Act” is introduced to curb fraud among retailers, and means that all information in a cash register must be available to the Swedish Tax Agency. This makes it more difficult to handle money outside the register.
2012– Swish is being launched, and takes off for real in 2014–16. Additional services, like iZettle, a card reader connected to the mobile phone used by retailers, pops up.
Niklas: “Swish was a slow starter but has since revolutionized payments between individuals. Even if you go to the flea market, the sellers use Swish today."
The banks continue to cut down on the number of bank offices they the existing ones are often cashless. This makes it even more difficult to use physical money.
2012– The Panaxia scandal. Sweden's largest security company steals its customers' money, which creates chaos when large numbers of retailers get a shortage of cash and a large number of ATMs all over the country are empty.
Niklas: “This scandal made the retailers hesitant. The trust they had for the security companies’ ability to manage cash was gone.”
2014–2016 New banknotes and coins are introduced in Sweden. The shift between old and new banknotes and coins becomes a natural breaking point for many traders, and they choose the digital route instead of learning the new look on the cash.
Niklas: “Today, traders can say no to cash – if they in one way or another declare it before you enter a store. In other parts of Europe traders can’t do that. And it is also worth pointing out that the digital path that the Nordic countries have chosen is not necessarily the solution for the rest of the world."
2019– Now around 70 percent of the bank branches are cashless, over 7 million people have downloaded Swish (68 percent of them use the service every month). At the same time, more and more traders are deciding to stop accepting cash, while the Riksbank is considering launching digital cash, so-called e-kronor.
Niklas: “We see that the cash flow in society has actually increased lately, and in addition, a Riksbank inquiry has suggested that both the Riksbank and the commercial banks must take greater responsibility for providing cash management services. The down-going trend in the use of cash has stopped, and the question is whether this level is more of a permanent state or whether it is a pause on the road towards an almost completely cashless society. We know that it is mainly elderly who prefer cash, while young people prefer to use the mobile for payments. Perhaps it is simple: demographic trends will determine this issue."
Text and photo: Anna Gullers