Sweden, also known as the Kingdom of Sweden, is the third largest country in the European Union. But the country which borders Norway and Finland has a total population of merely 9.7 million. People may not know or heard of Sweden, but they definitely know IKEA, the world’s largest furniture retailer founded in Sweden back in 1943. Do you know that Sweden was the first European country to introduce bank notes in 1661?

Ironically, Sweden is expected to be the first country in European Union, or perhaps the world, to be moving away from bank notes in a very near future. The prediction that the country will be the first cashless country on planet Earth has been making its round for as long as one can remember. It’s not hard to see how this is more of a reality than a myth. And the signs of a cashless society are all over Sweden cities.

 

Public buses don’t accept cash – tickets are prepaid or purchased with a cell phone text message. Businesses and even banking institutions have slowly but surely accelerate the vision of a first cashless nation – stopped handling cash altogether. Amazingly, even in houses of worship, such as the Carl Gustaf Church in Karlshamn, southern Sweden, credit card machine was installed back on Sept 7, 2011 to make it easier for worshippers to make offerings.

If that was not enough to raise your eyebrows, consider some poor Swedishes who sell magazines such as “Situation Stockholm” to bring in some income. They have a debit card reader, provided by the magazine’s publishers, to accept payment from passers-by, who otherwise don’t have 50 kronor (5.70 euros; US$7.30; £4.50; RM23.50) to buy a copy. But not everyone cheers such society. In Apr 2013, a robber entered a Stockholm bank – but had to leave empty-handed, discovering that he had picked a cashless bank (*grin*).

The number of bank robberies in Sweden plunged from 110 in 2008 to 16 in 2011. And in 2012, a mere five bank robberies were committed – the lowest figure in 30 years – according to the Swedish Bankers’ Association. According to Bank for International Settlements in 2012, bills and coins represent only 3% of Sweden’s economy, compared to an average of 9% in the euro zone and 7% in the United States.

 

Today, four out of five purchases in Sweden are paid electronically or by debit card. On average, Swedes use 260 transactions per person per year. The latest prediction has it that the country could become “completely cash free” by as early as 2030, conservatively speaking. As a comparison, Italy, another European Union member is at the opposite of the trend. As much as three-quarters of Italian purchases are still paid for in cash.

Italians have low confidence in the authorities and their banking system. In this country, people prefer cash over electronic transactions because it’s easier to avoid value-added tax and hiding profits from the much hated taxman. Needless to say, digital trail means it’s harder to get involves in corruption or bribery. However, there’s a problem with cashless society – the risk of cyber crimes could be unlimited.

 

According to the Swedish National Council for Crime Prevention the number of computerized fraud cases, including skimming, surged to nearly 20,000 in 2011 from 3,304 in 2000. There’s also issue with personal privacy because electronic trail of transactions means your profile could be built with ease from anybody who has your data, including the government. Still, Sweden has to compete with countries such as Iceland, Netherlands, France, Canada or even Singapore to claim the trophy.

But considering Swedish government had already enforced new regulations on 1st Oct 2013, which prohibits citizens from engaging in certain business activity without registering with authorities and paying a fee of close to 100 EUR (850 SEK; US$127; £80), the country is dead serious about becoming the first cashless country. For now, the only places that favour cash are the rural areas. Sweden is also set to introduce new Swedish banknotes in 2015. So, it’ll be some times before a real cashless country will emerge.

 

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October 13th, 2014 by financetwitter

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