If you’ve ever bought something at a farm stand or kiosk, chances are you’ll have seen some variation of Square, the portable card reader attached to the vendor's smartphone.
In Sweden, theses types of electronic payments are everywhere, according to a new study from Stockholm's KTH Royal Institute of Technology. Researchers say the country is fast becoming the world’s first cash-free society.
At the end of 2014, just 83.2 billion krona (US$10.2 billion) were in circulation as tangible money, according to the Swedish National Bank, a significant decline from the 106 billion krona (US$13 billion) in 2009.
And in 2017, all but one coin will become invalid, according to the Swedish National Bank.
This observation is not entirely new. First-time visitors just walking on the streets of Stockholm have glimpsed the switch to mobile, with even homeless people selling the popular street magazine “Situation Stockholm” equipped with portable card readers. If you attend church, donations are collected by card, according to Credit Suisse.
“Swedes are pretty trusting and we’re used to embracing new technology so this was the perfect solution,” Pia Stolt, a representative for the magazine, told The Guardian. “The cashless society campaign we’re seeing in Sweden is definitely a good move as far as we are concerned – it’s unstoppable.”
Denmark, Norway, and Sweden are united in leading the charge to a cash-free economy. "Scandinavians rely on cash for less than 6 percent of all payments made. By contrast, around 47 percent of U.S. payments are still made with cash, according to the Norwegian central bank," reports CNN.
Of the cash currently still on the market, Niklas Arvidsson, an industrial technology and management researcher who worked on the KTH study, estimates that “only somewhere between 40 and 60 percent is actually in regular circulation.” The rest can be found tucked away using other anachronisms, such as bank deposit boxes.
“Cash is still an important means of payment in many countries' markets, but that no longer applies here in Sweden," said Mr. Arvidsson, according to Science Daily. "Our use of cash is small, and it's decreasing rapidly.”
More than 500 bank branches in Sweden stopped accepting cash between 2010 and 2012, and at the same time, 900 ATMs were removed, reports Credit Suisse.
Proponents of going cashless say that it helps reduce the risk of robbery and lowers handling and transportation costs. In fact, in a society where Swish – a money transfer app introduced by Swedish and Danish banks – is used ubiquitously, the few people who do carry cash are now seen as suspect.
“At the offices which do handle banknotes and coins, the customer must explain where the cash comes from, according to the regulations aimed at money laundering and terrorist financing,” said Arvidsson.
“In general, the rule of thumb in Scandinavia is: ‘If you have to pay in cash, something is wrong,’” writes Mikael Krogerus in a Credit Suisse report. “Four out of five purchases here are made electronically.”
Opponents of the transition say it raises ethical issues, is too exclusive, and makes banks a target for cybercriminals. “The issue is far too important to be left in the hands of the private sector,” former chief of police and former Interpol president Björn Eriksson wrote in an op-ed for Swedish newspaper The Local. “What happens to people's privacy when all transactions are traceable? What happens when things go wrong?
We need a public inquiry to look explicitly at reviewing the public's access to cash.”