Mobile Commerce

Could Sweden Be The First Cashless Country?

The beginning of October and transition to EMV marked a major shift for the U.S. mobile payments industry, but that’s nothing compared to where Sweden might be in a few short years.

According to a recent study conducted by industrial technologists at the KTH Royal Institute of Technology in Stockholm, there are only about 80 billion Swedish kronor ($9 billion) in circulation today, a decline from 106 billion in 2009. The data might be even more dramatic, as Niklas Arvidsson, management researcher at KTH, noted that somewhere between 40 to 60 percent is simply languishing in safe deposit boxes or simply in people’s homes. For reference, data from the U.S. Federal Reserve shows nearly $1.4 trillion in circulation as of Sept. 30.

“Cash is still an important means of payment in many countries’ markets, but that no longer applies here in Sweden,” Arvidsson said in a statement. “Our use of cash is small, and it’s decreasing rapidly.”

Though it’s hard to believe that an entire society can transition to a cashless economy without multiple factors in play, The Independent noted that Swish, a direct payment app that allows individual users to send money between them at any time, has had a major impact on payments in Sweden. Instead of a plucky startup developing the app, Sweden’s national bank, Riksbanken, spearheaded the development with Norway’s Bankgiro in close collaboration.

In addition to massively reducing the physical burden of handling cash on financial institutions and commercial banks, Sweden’s move to cashless payments has increased transparency in an economy that boasts a banking system with entirely digital management systems.

“At the [bank] 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,” Arvidsson said.

Arvidsson expressed cautious optimism at the idea of propagating Sweden’s success with mobile payments abroad, though he said it would take “a long time to change other countries’ banking systems from scratch.”

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