From First on Cash to First Cashless – Sweden’s digital economy, is there a downside?


Image Source

In 1661, Sweden was the first European country to use cash for payments. However today, even Gods in Sweden (Churches) have gone cashless. Thanks to the Swish payment service launched in 2012, consumers are fast moving away from cash payments. The trend has accelerated in recent months, with Q1 2017 recording the lowest public circulation since 1990.

I came across some unbelievable numbers when I was looking through this subject across various data sources. Some of them that really resonated are these.

  • 97% of Swedish Consumers have access to a card. No wonder, it’s the most widely used payment method.
  • 20% Swedish cash payments as a percentage of total transactions in 2016 vs the global average is still 75%.
  • The average Swedish consumer makes about 290 card payments in a year, where the European average is 104.
  • 79% of consumers use a card while making transactions of 100 to 500 SEK, as per a survey by Riksbank.
  • 60% of consumers in Sweden think they can cope without Cash in Society.
  • 85% of consumers in Sweden have access to online banking.

Sweden 2

A McKinsey research shows that Sweden is up there with Singapore, the Netherlands and France in the race to go cashless.

So what’s the flipside of going cashless?

In a cashless economy, the infrastructure is vulnerable to major cyber-attacks. There is generally a centralized payments infrastructure, and if that is breached, it could bring down the entire network.

Not everyone is tech savvy. There are pensioners who still prefer cash in hand, than a digital wallet, or apple pay. From a policy stand point, it is critical to ensure the entire consumer base is comfortable with what is on offer.

Then there is the issue of privacy. We already live in a world where most things about us are known to Google, Facebook, Apple and Amazon (and a few more). The moment all our transactions go digital, it would be handing over greater control to the state on what we spend on.

It is also essential that strict controls and processes are in place in a digital economy. AML, KYC and Anti-terrorism practices, checks and controls will have to be thorough to ensure there are no misuse of the system.

It is essential that the legal system is up to date, to deal with criminal activities in the digital economy. One example is that, where, as per Swedish law physical cash stolen is robbery, getting hold of someone else’s PIN or credit card is not.

There is this negative attitude against cashlessness and going digital as surveyed by Riksbank. People who view digitization with a negative attitude have increased in numbers between 2014 to 2016.

negative sentiment

Image Source: Riksbank

The advantages of going cashless easily outweigh all these issues though. Friendly customer journeys, more accountability from a tax perspective, more liquidity in the banking system, and lower costs of doing business are all advantages to the consumer, state and businesses are a few top reasons to go for the cashless drive.

While speaking at the Singapore Fintech Festival earlier this month, Mr Erik Thedeen (Director at Sweden’s financial supervisory authority) highlighted that it was the entire Swedish innovation ecosystem that has helped this cashless drive.

The country had always adopted Fintech innovation very early and had proven to be one of the top three testing grounds in Europe for disruptive ideas. It couldn’t have happened by just a central bank or a regulator driving digitization.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.



  1. Hi Arun,
    Interesting post, thanks. Any insights/color on this data point?

    People who view digitization with a negative attitude have increased in numbers between 2014 to 2016.

    • There are a few factors Bernard..

      – Cyber threats with a centralised digital payments service
      – privacy issues that arise with transactions going completely digital
      – and more generally, inspite of the level of impersonal digitisation happening, I think there is always a subset of consumers who prefer and need the human handholding!!

      The Riksbank website doesn’t summarise all these insights in text, but going through the survey results on their database, the questions asked make these factors clearer!!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.