Sweden is the most cashless society on the planet, with barely 1% of the value of all payments made using coins or notes last year. So how did the Nordic nation get so far ahead of the rest of us?
Warm cinnamon buns are stacked next to mounds of freshly-baked sourdough bread at a neighbourhood coffee shop in Kungsholmen, just west of Stockholm city centre.
Amongst the other typically Scandinavian touches – minimalist white tiles and exposed filament light bulbs – is another increasingly common sight in the Swedish capital: a “We don’t accept cash” sign.
“We wanted to minimise the risk of robberies and it’s quicker with the customers when they pay by card,” says Victoria Nilsson, who manages two of the bakery chain’s 16 stores across the city.
“It’s been mainly positive reactions. We love to use our cards here in Stockholm.”
Across the country, cash is now used in less than 20% of transactions in stores – half the number five years ago, according to the Riksbank, Sweden’s central bank.
Coins and banknotes have been banned on buses for several years after unions raised concerns over drivers’ safety.
Even tourist attractions have started to gamble on taking plastic-only payments, including Stockholm’s Pop House Hotel and The Abba Museum.
The iconic band’s Bjorn Ulvaeus is, in fact, one of the nation’s most vocal supporters of Sweden’s cash-free trend, after his son lost cash in an apartment burglary.
Smaller retailers are jumping on the bandwagon, too, making use of home-grown technologies such as iZettle, the Swedish start-up behind Europe’s first mobile credit card reader.
Such portable technologies have enabled market traders – and even homeless people promoting charity magazines – to take card payments easily.
“I took my kids to the funfair and there was a guy selling balloons and he had a card machine with him,” remarks Senobar Johnsen, one of the Swedish customers back at the bakery.
Currently living in Portsmouth in southern England, she’s visiting Sweden for the first time in a year and says it’s “visibly noticeable” that people are paying more with cards.
“It’s not like the UK where there’s often a minimum spend when you go to a kiosk or you’re in the middle of nowhere. I think it’s great”.
Swish, a smartphone payment system, is another popular Swedish innovation used by more than half the country’s 10 million strong population.
Backed by the major banks, it allows customers to send money securely to anyone else with the app, just by using their mobile number.
A staple at flea markets and school fetes, it’s also a popular way to transfer money instantly between friends: Swedes can no longer get away with delaying their share of a restaurant bill using the excuse that they’re short on cash.
“In general, consumers are very interested in new technologies, so we’re quite early to adopt [them],” explains Niklas Arvidsson, a professor at Stockholm’s Royal Institute of Technology.
This is partly down to infrastructure (Sweden is among the most connected counties in the EU); a relatively small population that is an ideal test-bed for innovations; and the country’s historically low corruption levels, he argues.
“Swedes tend to trust banks, we trust institutions… people are not afraid of the sort-of ‘Big Brother’ issues or fraud connected to electronic payment.”
Somewhat paradoxically, Sweden’s decision to update its coins and banknotes, a move announced by the Riksbank in 2010 and fully implemented this year, actually boosted cashless transactions, explains Prof Arvidsson.
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“You would have thought that a new kind of cash would have created an interest, but the reaction seems to have been the opposite,” he says.
“Some retailers thought it’s easier not to accept these new forms of cash because there’s learning to be done, maybe investment in cash registration machines and so-on.”
There has also been a “ripple effect”, he says, with more shops signing up to the cashless idea as it becomes increasingly socially…