As I warned last year, we are sleepwalking towards a cashless society. Since then the war on cash has turned from one of words to one of action. And the frontline of that war is Sweden.
Here’s more from an article written by Mikael Krogerus and published by the Swiss bank Credit Suisse:
Sweden was the first European country to implement paper money; now it is the first to eliminate it. In Scandinavia, the future has already begun.
Travelers to Scandinavia inevitably make two observations: First, not all natives are blond (only 25 percent of the adult population is naturally blond). Second, there is no longer any cash. No matter where you are or what you want to purchase, you will find a small ubiquitous sign saying “Vi hanterar ej kontanter” (“We don’t accept cash”). Whether it’s for mulled wine at the Christmas market, a beer at the bar, even the smallest charge is settled digitally. Even the homeless vendors of the street newspapers Faktum and Situation Stockholm carry mobile card readers.
“If you’re paying in cash, something is wrong”
In 1661 the Swedish central bank was the first in Europe to issue paper money. Now it is the first to eliminate it. What may sound rather risky to the skeptical Swiss is no big deal in Sweden. Four out of five purchases here are made electronically. Plastic dominates, particularly in the retail sector, where 95 percent of all sales are handled with cards. The last area in which a Scandinavian still needs cash is the purchase of illegal items such as drugs. In general, the rule of thumb in Scandinavia is: “If you have to pay in cash, something is wrong.”
Embraced by Citizens
It’s unclear when exactly cash lost its luster. What is clear is that the six largest Nordic banks (with the exception of the merchant banks) have been gradually weaning themselves off cash since 2010. The citizens have embraced this move as if it were the most natural thing in the world. Between 2010 and 2012 alone, more than 500 branches went cash-free. During that same time 900 cash machines were removed, which resulted in the second-to-worst cash machine coverage in Europe. One of the last places where cash can be obtained is at the supermarket checkouts. There one can receive up to 500 Swedish Krona (CHF 55) in cash per purchase.
Hard Times Ahead for Bank Robbers
“By 2030 we will be completely cash-free,” says Niklas Arvidsson, adjunct professor at the Royal Institute of Technology and author of the popular study “The Cashless Society.” In his work, he outlines the main reasons for the demise of cash. From the bank’s perspective, a cash-free society offers the opportunity to avoid complex cash handling and eliminate bank robberies, theft, and dirty money.
Security is the external sales pitch. Internally, transaction charges provide an opportunity for profit, but there has also been a fundamental shift in strategy. Whereas a few years ago banks focused on corporate and large private clients, today the main target is the individual client. A fully digitalized payment environment provides the bank with precise information about how much money each customer spends, where, and on what. What exactly this data is used for – other than advertising – remains to be seen…