Sweden is aiming to be the world’s first cashless society and an Australian Payments Clearing Association (APCA) report views the goal as realistic.

“Not only are fewer notes and coins being printed each year, but also the major banks are limiting the handing out and receiving of cash at branches. Approximately 70 per cent of branches, of the major lenders, are currently cashless,” the authors write.

In fact, those cashless branches are not evenly spread: for three of the four major Swedish banks combined, 530 of their 780 offices no longer accept or pay out cash. However, Sweden’s largest bank, Handelsbanken, remains committed to handling cash at all of its branches.

According to Sweden’s central bank, Riksbank, which undertook a comprehensive study of retail payments market in 2013, currency represented only 2.6% of GDP, and has declined by 26.8% since 2007.

In the same period, use of debit cards increased by 35% and credit cards by 76%.  Overall, the use of cards for transactions was up 41%.  Direct debits also rose by 35% and cheques simply vanished.

Sweden is also unique in the world in that the nominal amount of currency in circulation is also falling – there are fewer banknotes.

The lack of cash has even forced the publishers of Situation Stockholm - a paper sold by homeless people similar to the Big Issue here in Australia -  issue their vendors with portable card readers supplied by mobile payments company iZettle. If the thought of handing your credit card to a homeless person boggles your mind then you’re definitely not Swedish. According to spokesperson Pia Stolt, “The results have been great - vendors’ sales are up 59%”.

iZettle (like the US Square) is a device-plus-app combination that turns mobile phones and tablets into card payment terminals, providing an affordable solution for market stallholders and other part-time or low volume sellers.

It is the micro-retail equivalent of Swish, another Swedish payment innovation.

Introduced in 2012 by the six largest banks (Danske Bank, Handelsbanken, Länsförsäkringar Bank, Nordea, SEB and Swedbank), Swish is designed for person-to-person transactions.

Users connect their mobile number with their internet banking service and then download the Swish application.  They are then able to do everything from providing their children with pocket money to splitting the bill at a restaurant, with both parties able to see and verify the transaction in real time.

Swish is an example of the high level of cooperation among the Swedish banks. It is this cooperation, rather than consumer demand, which is driving the growth of non-cash payments.

Several players in the market believe that the demand is weak. In somewhat simplified terms, it could be said that current payment services are practical from a consumer perspective and, consequently, many people are yet to see a reason for using new methods or payment. This means that the market’s players need to employ various methods to convince consumers that it is worthwhile to use the new payment services.


Electronic payment services, primarily cards, are replacing cash, and banks regard the handling of cash as costly. Accordingly, banks have an incentive to try to steer customers toward such payment services, which reduces the use of cash and therefore the bank’s overall expenses. Furthermore, from an international perspective, the efforts to increase automation of payment services and reduce the expenses associated with cash are strong driving forces for innovation.

Is it something Australia can emulate?

Australia is not far away from Sweden when it comes to the numbers and types of payments.

While Riksbank found that currency represented only 2.68% of GDP, the equivalent for Australia is 4.05% - close to Sweden but a full 3% below the United States.

The real difference lies in the rate of decline in cash.

While Australian’s use of cash continued a stately decline (2% per year) from 73% in 2005 to 59% in 2013, Sweden’s use of cash has been in free-fall since 2007 (dropping 4.4% per annum for a total of 26.8%).

According to Riksbank that has nothing to do with consumers but with economies of scale and scope in the financial sector.


This article represents the views and opions of the author and do not necessarily reflect the opinions of BPAY.

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