The counter of a café, with food and drink on the sides, machines for card payments on the counter and a woman looking into the camera behind the counter.
Photo: Love Strandell/Zettle

A cashless society

In Sweden, technology is close to making cash a thing of the past. All aboard?

Sweden has been at the forefront of banking innovation for a long time. The country's first automatic cash machine was inaugurated in July 1967, only a week after the world’s very first one was opened in London. And the development and simplification of payments has evolved greatly ever since.

‘Can I swish?’

You can tell that something has become part of the culture when it enters the day-to-day language. The verb swisha (to swish) is the perfect example. It refers to using Swish, an app for instant payments. A smartphone with a number is all you need to make a transfer in a matter of seconds.

Recently some cafés, shops and supermarkets have started to display QR codes that customers can scan to pay directly by using their phones. The Swish app, together with many other large and smaller scale innovations, contribute to Sweden’s reputation as an evermore cashless society.

Mobile bank ID

Today, a big part of integrating into Swedish society involves using BankID. It’s a mobile app that allows anyone with a Swedish personal identification number (personnummer) and bank account to access all digital public services, use online banking and even sign contracts.

The simplicity of a six-digit code or the use of a fingerprint on a smartphone literally puts almost everything at your fingertip. This saves people in Sweden from having to remember a large number of codes and passwords in order to access digital services.

Part of everyday life

Cashless payments very much go hand in hand with the Swedish lifestyle.

Swish’s popularity can partly be attributed to Swedes’ fondness for splitting the bill in bars and restaurants. Often, one person pays and the rest swish their share.

According to Ella Johansson, professor in Ethnology at Uppsala University, this has much to do with the relation between friendships and resources:

‘Swedes see exchange of money and debt as a threat to friendship. In other cultures, like Italy for example, people would fight over being the one to pay the bill for the sake of keeping up the friendly relations.’

Shoppers at an outdoors flea market.

Even at flea markets cash is often a no-go in Sweden. Photo: Faramarz Gosheh/imagebank.sweden.se

A mobile phone with a page from the Klarna app on the screen.

Fintech is growing with the cashless society. Photo: Klarna

A cash machine in a wall by an empty street.

Swedish cash machines are not as popular as they once was. Photo: Bankomat

A square-shaped prototype with lots of different colours.

Klarna future shopping lab explores what future shopping experiences could look like. This is a prototype of a modular mailbox. Photo: Klarna

Shoppers at an outdoors flea market.

Even at flea markets cash is often a no-go in Sweden. Photo: Faramarz Gosheh/imagebank.sweden.se

A mobile phone with a page from the Klarna app on the screen.

Fintech is growing with the cashless society. Photo: Klarna

A cash machine in a wall by an empty street.

Swedish cash machines are not as popular as they once was. Photo: Bankomat

A square-shaped prototype with lots of different colours.

Klarna future shopping lab explores what future shopping experiences could look like. This is a prototype of a modular mailbox. Photo: Klarna

Shoppers at an outdoors flea market.

Even at flea markets cash is often a no-go in Sweden. Photo: Faramarz Gosheh/imagebank.sweden.se

A mobile phone with a page from the Klarna app on the screen.

Fintech is growing with the cashless society. Photo: Klarna

A cash machine in a wall by an empty street.

Swedish cash machines are not as popular as they once was. Photo: Bankomat

A square-shaped prototype with lots of different colours.

Klarna future shopping lab explores what future shopping experiences could look like. This is a prototype of a modular mailbox. Photo: Klarna

Swedish fintech

The move towards a cashless society is also driven by fintech, or financial technology. Many internationally renowned fintech companies were founded in Sweden. One example is Klarna, a payment system startup founded in 2005 that counts over 90 million customers globally.

Another is iZettle, which makes small cheap card payment terminals. The terminal allows a retailer to take payments by connecting it to a dedicated app on a smartphone or tablet.
Handy payments, literally

To some people, the cashless experience is more than skin-deep… They’ve got a microchip implanted in their hand, which can store different kinds of data – from ID to door-opening blips, train tickets and even bank cards. This makes it possible to pay by simply waving the hand.

Though this might sound like science fiction, over a thousand Swedes have inserted this handy biohacking commodity into their lifestyle. It saves them from carrying bank cards, ID, membership cards and keys around.

How many Swedes use cash?

In ten years the proportion of Swedes using cash has fallen from 39 to 9 per cent, according to Sweden’s central bank, the Riksbank. The use of cash is mostly limited to making small payments and by the elderly. In shops and cafés, it is much more common to find the sign ‘Card only’ or ‘Cashfree’ than ‘Cash only’ as in many other countries.

Online shopping is also very popular, with many Swedish retailers gaining a good share of their margins via web shops. According to Eurostat, 82 per cent of the Swedish population makes purchases online, putting the country among the top in Europe.

Risks and challenges

Not everyone is enthusiastic about the cashless society, though.

There’s Stefan, a 73-year-old man who says that he still likes to make cash payments: ‘Especially when I go to Systembolaget [the state monopoly shop that sells alcohol]. I never pay by card there, because I don’t want the bank to know how much I spend on wine.’

Young Italian lawyer Silvia has lived in Sweden for two years and she thinks that electronic payments are a really good way to prevent money laundering, corruption and other criminal activities. But when it comes to implanting microchips, she expresses concern: ‘I would never have one implanted! Think of all the personal data produced, what would happen if it fell in the wrong hands?!’

A more common problem is the increasing divide between tech-savvy young people who adapt to changing payment methods easily and the elderly, many of whom still prefer using cash. Just look at bus tickets; people are often expected to buy tickets via an app connected to Swish or a bank card. This makes it very handy for those accustomed to using smartphones, but for those who have an old-school phone or no phone at all, this is a real barrier.

What next for cashless Sweden?

The future of banking looks very high-tech and focused on artificial intelligence, AI. Apart fom the above-mentioned, fintech companies like Tink and Rocker (previously Bynk) are also booming, and more startups are on the horizon. Banking apps and Swish are also continuously evolving, with upgrades such as simplified and integrated services transitioning towards a cashless society.

Who knows. ؘMaybe one day everyone will be making payments with their implanted microchips? Whatever the future of banking has in store, Sweden is likely to remain at the forefront of future payment innovations.