Articles & stories

Sweden: "We don't accept cash"

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. The idea is to be closer to customers than they are to themselves and to offer solutions before customers even see the problems. This is the motto under which these mountains of data are analyzed.

But cyber criminals Are Rubbing Their Hands

One of the few with a critical perspective on this development is former chief of police and former Interpol president Björn Eriksson. In his polemic paper The Cards on the Table, he describes the idea of a cash-free society as a moneymaking plot by the banks. He contrasts the decreased incidence of bank robberies with a drastically increased rate of cybercrime. According to Eriksson, the public hears little about the growing number of hacking attacks against bank servers. Even less well-known is that these "virtual bank robberies" don't target the banks' vaults, but rather their databases.

Debit Cards for Seven-Year-Olds

From the customers' perspective the death of cash is the next logical step, mimicking their current habits. Most Scandinavians have not carried any cash or been to a bank in years. Children have pocket money transferred into their accounts, and in Norway seven-year-olds are allowed to pay with a debit card. Even the prospect of having a complete record of their personal expenses stored seems to leave most citizens relatively unperturbed. Behind this acceptance lies the perception that the government, the authorities and even the banks are trustworthy. If there is any audible criticism, it is about insufficient digital infrastructure in rural areas.

Even the Church Collection Is Paid by Card

Arvidsson explains that his fellow citizens' relaxed attitude towards these drastic changes is due to their high affinity for anything digital. Sweden is not only the first country in which church collection is payable with plastic, it is also the first country in which every child receives a government-issued iPad on the first day of school, as well as the first country in which children learn to write on a keyboard, not by hand.

Women's suffrage, free wifi, hipster beards and now a cash-free society – many things that were unimaginable in the past but are quite ordinary these days had their start in the North. If it is true that Scandinavia presents a reliable barometer for societal developments, then one can look expectantly towards the North and ponder which will demand a higher price: Being the first or the last to do something new.