Already a digital economy pioneer, Sweden could become completely cashless by 2025. As other economies look set to follow suit, the FT's financial editor, Patrick Jenkins, asks whether the gains outweigh the risks.
Sweden is the king of the card. There's not much you can't buy with a bank card these days. In fact, many shops don't take cash at all. When was the last time you used cash?
The last time I used cash was maybe the last year in the summer.
I carry very little cash just now, very little.
Many of the shops don't take cash, so you have to have cards.
By value, barely 1% of all transactions in Sweden involve cash. And if the amount of cash in circulation continues to decline at its current rate, the country could be completely cashless by 2025, something that other countries are taking keen interest in, as their economies follow suit.
One main advantage, of course, is digitalised economies make our everyday life much more convenient. So I can do my financial services at 3 o'clock in the morning if I want to, and I don't have to stand in line at the bank office before they close at 3 o'clock. Then we have also used these development tools to deliver new services and new technologies that make everyday life much easier for all of us in the economy.
But there are victims in Sweden's cashless society, like the vendors of Situation Stockholm, a magazine set up to provide its homeless workers with a source of income.
In 2011, more and more members came to us telling us people do not carry around cash. We only had to go to ourselves, the staff of Situation Stockholm, realising we never carry cash. And we just realised we have to fix this. Because otherwise, their job will go away. So that started us working on cashless solutions.
The latest solution is a mobile payment app called Swish, which lets people send and receive money in real time using their smartphones.
I have my card here, and they have a camera in their phones. They take a picture, and then it come up on the display, Situation Stockholm, which number, who it belongs to, and they just have to punch in their codes.
Between them, card and mobile payments account for around 5 billion transactions every year in Sweden. But some here are concerned about the security risks.
Criminality exists, with cash, definitely, but also without cash, if you are talking about false identities, possibilities to fool people with false cards, et cetera, et cetera. And then you have a development where these crimes are looked upon as transaction costs, because you can't seriously combat them. You can't have the police to take them seriously. And for me, that's a problem.
Economies around the world are weighing up whether the benefits of going cashless outweigh the risks. And until we have more answers, all eyes are going to be on Sweden.