Scandinavian countries have developed a number of world leading systems. The Nordic model of socialism is the go-to prototype for those who fall to the left of centre on the political spectrum, while the region’s rising tech scene is rivalling Silicon Valley for world-leading innovation.
Such technological sophistication, coupled with the economic stability of the region, has also made Scandinavia the class leader of the cashless world. More and more these days, we talk about the cashless society we are developing both in the west and globally, but it’s Scandinavia that actually leads the global charge towards a completely cash-free economy.
While Nordic countries are on the verge of a cashless existence, the question remains whether the rest of the world will follow suit — and if so, when?
Sweden: the global pioneer of the financial system
Sweden has long been at the forefront of global finance. Back in 1661, the country was the first in the world to introduce bank notes into society. Fast forward 358 years, and it’s set the become the first to remove them completely by becoming a fully cashless society by 2023.
Right now, across the Nordic countries, over 80% of transactions are electronic. In Sweden specifically, cash accounts for less than 1% of all transactions, with over 99% of merchants accepting debit cards — indeed, most retailers are already electronic payment only.
Sweden will officially stop accepting cash in 2023. Instead, payments will be made by card or through the mobile wallet, Swish — an app developed collaboratively by the six largest banks in Sweden back in 2012, and already used by well over half of the entire population. Banks now issue debit cards to citizens aged seven and up. Incredibly, many young children in Sweden will never know printed money as practical currency, instead just a part of history.
With the Swedish Central Bank also looking to introduce the e-Krona, a digital currency, into society by 2021, the country is a few years away from a seemingly unthinkable economic transition. The benefits of a cashless society are substantial — travel will be significantly safer, while serious crimes such as bank robberies will become redundant with no money to steal, and the drug, counterfeit and weapons markets will be dented. Tax avoidance will also drop.
It’s a spectacular and admirable model for the rest of the world to follow, but while neighbours Norway, Denmark and Finland won’t be too far behind, those outside of Northern Europe are much further away.
Playing catch up in southern Europe
Domestically, despite good progress, the UK remains a long way off the pace. At the start of this year, 3 million small businesses remained cash only, although that figure is changing swiftly with around 3,000 sign ups to mobile payment devices a day. The payment trends are promising too. Ten years ago, cash payments accounted for 60% of all transactions in the UK. Right now, it’s 30%, but it will be another ten years before it reaches 10%.
The wait is probably for the best, though. Right now, it’s estimated that eight million Brits, primarily the low-income, working class and rural demographic, would struggle in a cashless society.
Across the pond, huge logistical issues stand in the way of a cashless America. Surprisingly, contactless payment is still relatively rare across the country, after an initially hesitant adoption of the technology from US issuers. Even with growing consumer demand for contactless present, the sheer geographical scale of the process means it’s hard to imagine the entire country being cash free any time soon.
Elsewhere, an appetite for cash still remains. The government of Cantabria, an autonomous region of Spain, found a pilot to push cashless payments in the region at the back end of 2017 soundly rejected. Their analysis found 30% of local businesses still considered card-related costs too high, while 60% didn’t bother to promote card payments because their customers didn’t demand it. At the time, 28% of retailers remained cash only, with only one in five perceiving digital payments to offer lower operational costs.
Indeed, cultural preference in southern Europe may stand in the way of cashless progress. Spain, for example, has a high rural population (around 20%), as well as one of the highest access rates to ATMs in Europe. The region tends to associate cash with a sense of security, and it could take a long time to shift such established attitudes.
With all considered, there’s no doubting the progress of cashless technology. Credit cards will remain a foundation for many people managing their personal budgets, but the technology developing around them is sure to take over global society sooner or later. With over a billion Chinese users of mobile wallets, and promising signs in flourishing economies in eastern Europe and Asia, it appears a staggered global arrival to a cashless economy is, more or less, inevitable.