Sweden: How to Live in the World’s First Cashless Society

Coins and banknotes will not completely disappear at the beginning. But no one will be able to use them in a practical sense. They will become just collectibles and will be included in museums’ collections. 

Sweden, a nation of early adopters

Sweden has always been one of the first countries to embrace new technologies. This is noticeable throughout the Scandinavian country’s history, and its financial system is no exception. 

In 1661, Sweden was the first country in Europe to introduce banknotes. It has been at the forefront of banking innovation for quite a long time. The nation’s first automatic cash machine was installed and ready to use in July 1967. This was only one week after the world’s first one opened in London.

And in 2023, Sweden proudly became the first cashless nation in the world, with an economy that goes 100 percent digital. About 80 percent of Swedes use cards, with 58 percent of payments made by card and only six percent made in cash, according to the Swedish Central Bank.

Electronic payments have rapidly increased, with more restaurants and shops not accepting cash payments. Mobile payment services also make payments from one individual to another much more accessible.

Most Swedish banks have stopped allowing customers to make cash transactions over the counter. Many branches across the country have closed. Cash is costly to manage due to the high-security systems. If someone wants to make a deposit or withdraw money, they must go to an ATM.

Sweden: World’s first cashless society by 2023

It took Sweden 362 years to transition from being the first nation in Europe to adopt banknotes in 1661 to becoming the world’s first cashless economy in 2023. 

Everyone in Sweden has access to mobile coverage, and the majority of purchases made in the country are electronic. Instead of the outdated magnetic strip, Swedes opt for chip and Pin debit/credit card payments, as well as contactless technology and mobile payment methods like iZettle and Swish. These options were created to encourage a cashless lifestyle in Sweden.

This means that more than 80 percent of all retail transactions have been conducted electronically. This is similar to what happens in the other Nordic countries, including Finland, Norway, Denmark, and Iceland. 

The way the Nordics quickly embrace a cashless lifestyle strongly contrasts with the countries south of Europe, where cash is still a strong form of payment. Moreover, in some southern European cities, several establishments accept only cash. This is the opposite of what happens in Northern Europe, where cash is no longer accepted in most places. 

In Sweden, those businesses where cash is still accepted today will stop accepting cash payments in 2023. It’s becoming increasingly difficult to find establishments that accept cash these days.. Those from abroad must be ready to pay by card or the mobile application Swish.

A brief history of how Sweden made the transition to the cashless lifestyle

In 2012, the six largest banks in Sweden built an instantaneous mobile payment platform to help customers make electronic payments easier. The application, called Swish, was developed as a collaboration. Back then, Swish was embraced and used by everyone in Sweden.

Both banks and the Swedish government encourage citizens to adopt the cashless economy. Swish is now pretty close to becoming the Swedish standard for mobile payments. The application is used by over half of Sweden’s total population. Only less than 13 percent of the total population in Sweden relies on cash. 

Children are also part of the transition. Many will never know what it was like to live in a world where cash transactions were widely accepted. Most Generation Alpha children in Sweden will see printed money only through photos, videos, and museums. 

Swedish banks issue debit cards to citizens aged seven or older (with parental permission), translating to more than 97 percent of the population. This introduces these young citizens to the cashless society that will be part of their future.

There is no need to carry cash in Stockholm today

Cash accounts for less than 1 percent of the total transactions in Sweden. Cash transactions are heavily discouraged. More than 99 percent of merchants accept debit cards; consumer payments with cash are less than 20 percent of total transactions. Over 80 percent of all transactions are cashless, an increasing trend.

Several years ago, Stockholm’s public transport stopped accepting cash. Tickets are pre-paid, paid using a mobile application, or bought by debit/credit card from the driver or a ticket machine. Residents usually buy a monthly travel card, which is more convenient and less expensive than purchasing individual tickets.

In many stores, signs read, “No cash payment in this store.”

Most Swedes, especially those in the younger generations, never carry cash. Visitors to the country do not need to worry about currency exchange either. Yet, some tourists find it hard to believe they do not need any local currency when visiting Sweden. The fact is, cash is tough to find and see. 

Cash is never needed, not even for small purchases like hot chocolate at a Christmas market in Stockholm. All vendors have a mobile payment chip-and-PIN card reader like the one offered by Stockholm-based mobile payments company iZettle, or they accept payments through the mobile application Swish. Swishing is perhaps the easiest way of payment for everyone.

A practical reason for a cashless economy: Crime-fighting

Some reasons to move away from cash in Sweden include making transport more secure, which has already been accomplished in the Swedish capital. Reducing bank robberies as well as drug, counterfeiting, and weapons markets are also reasons why Sweden decided to make a move. It also means less tax avoidance. Bank robberies have considerably decreased in the past years since there is no cash in most banks in Sweden, and branches continue to disappear. Establishment owners feel safer without having any visible cash.

The future of money  

The future of money and the analysis of the development of the cashless society, which includes the analysis of the means to achieve it, and the analysis of the challenges and benefits it can bring, have been studied and discussed by academia regularly in Europe since the early 2010s.

Academics investigate the cashless society from multiple perspectives. Topics of discussion include cash in the future and the societal consequences of a cashless society. Other topics include new payment solutions as disruptive technologies, emerging payment technologies, emerging payment business models, biometric payments, integrity, and privacy, and the design of new payments and technologies which continue emerging. 

The introduction of the Swedish e-Krona

Sweden’s Central Bank has been testing before introducing its digital currency: The e-Krona. The digital currency is backed by the Central Bank and is meant to accelerate the country’s transition into a fully cashless society. The e-Krona pilot scheme started in 2019. The Swedish digital currency will be implemented throughout the country in 2021.

And that is your lot for today.

While Sweden may be the first nation to go cashless, many may follow depending on how it plays out. We’ll just have to watch and see how the Swedes take to it.