Sweden is on the verge of becoming the world’s first “cashless society”, as in the near future, every financial transaction that takes place in the country is expected to be performed digitally. The removal of physical cash is expected to make money laundering and terrorist funding more difficult.
Industrial technologists from the KTH Royal Institute of Technology in Sweden’s capital city of Stockholm have published a study which shows that cash is rapidly disappearing from Swedish society.
Co-author of the study Niklas Arvidsson said, “Our use of cash is small, and it's decreasing rapidly.”
The study discovered that there is just 80 billion Swedish Crowns, or just under $1 billion, in the pockets of the Swedish public and company cash registers. Only about half of that amount is in regular circulation.
Virtually every shop in Sweden accepts debit and credit cards. Most Swedish citizens carry no cash on their person. Also increasing in popularity is an app called ‘Swish’ that allows financial transactions to take place on smartphones.
Meanwhile banks are also participating in the trend. Many banks have opened that won’t even accept cash. The ones that do accept cash require that the customer inform the teller as to where the cash came from. The purpose of this requirement is to prevent money laundering and the financing of terrorism. The teller is trained to report any suspicious transactions to the police.
However, while a society without physical cash has its perks, there are some downsides as well. Homeless people and undocumented immigrants are likely to be left behind in the transition. Also, the elderly population of Sweden might have a difficult time using computers and smartphones to access their financial holdings. Many analysts predict that vulnerable sectors of Swedish society will become more reliant on Sweden’s social security system, which is one of the most generous in the world.
Experts are also worried about making the Swish app function in international transactions. It is also unlikely that other countries would be able to make a transition to a cashless society as easily as Sweden.
Arvidsson stated, “Swish is a brilliant idea, but to introduce it internationally is a challenge, not least because it takes a long time to change other countries' banking systems from scratch. But it is not impossible that a Swish-based banking revolution can also occur abroad."
While there are some challenges ahead, Sweden could very well become the world’s first society to do away with physical cash completely.