24 October 2019

EPC: We need a roadmap for the cashless society

One in ten UK adults now live a largely cashless life – in part thanks to the growing acceptance of contactless cards. But this number pales in comparison to Sweden, writes professor Leo Van Hove. A 2018 survey showed that four out of ten Swedes had not used cash in the previous month.

Indeed, in Sweden cash usage is declining faster than anyone thought it would. In the Riksbank survey mentioned above, in a mere eight years, between 2010 and 2018, the percentage of respondents who had paid in cash for their most recent purchase declined from 39 to 13 percent. Conversely, while in 2014 only two out of ten had recently used the local Swish mobile payment service, by 2018 this had increased to six out of ten. Looking ahead, in a survey by the Retail and Wholesale Council, half of Swedish retailers predicted they would not accept cash after 2025.

If one combines these observations, the upshot would seem to be that cash usage can reach a tipping point at which merchants realise that they are spending a lot of resources for a small percentage of customers and decide to stop accepting cash altogether, thus rendering cash less useful for consumers, and hastening its demise. Cecilia Skingsley, deputy governor of the Riksbank, has predicted that Sweden may well become cashless in as little as three to five years.

This rate of change has alarmed the central bank, which is concerned that not enough is being done to protect an estimated half million Swedes who are digitally excluded. The Riksbank is therefore trying to step on the brakes. To secure the general public’s access to cash, it has called upon parliament to oblige banks, whose branches have increasingly become cashless, to continue to provide cash services to their customers. In addition, the Riksbank has proposed a review of the concept of legal tender. In a country where retailers are not legally obliged to accept cash, this should be understood as a call to extend the remit of the law beyond public medical care.

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