Making of a ‘cashless society’
Sweden is set to become a totally cashless society in March 2023 - 24 March 2023 to be precise. Jonas Hedman, who is an associate professor at the department of digitalization at the Copenhagen Business School, who did a study on the prospects of the country becoming cashless, says he and his team arrived at this precise date after a survey of some 750 retailers and their cash management costs and the decline of cash in circulation in the country. He explains that when cash transactions fall below 7% of the total payment transactions, it becomes costlier to manage cash than the marginal profit on cash sales. When this happens, an economically rational retail management should stop accepting cash, says he. He also clarifies that what is meant by cashless society is a society where cash is not a generally accepted means of payment. There might still be bank notes and coins, but you would not be able to use them in a practical sense.
One thing interesting about Swedish laws is that contract laws have a higher precedence over banking and payment laws. For example, if an establishment puts up a sign that it does not accept cash, then the customer who enters the store is entering into a contract or an agreement with that store that it does not accept cash. In most of the countries, payment laws are above contract laws. Hedman says this is one of the key reasons why Sweden is more cashless than other countries.
Sweden has seen widespread use of payment cards from way back in the 1950s. Bank accounts were digitized starting the 1960s and internet came in the 1990s. The central bank also declared that it did not see cash as its core business and outsourced printing and distribution of currencies. A move towards cash free society was also initiated by the ordinary people like bus drivers, cab drivers, bank employees, etc, who came to be affected by robberies in the country. During 2015-2017, the country replaced its existing notes and coins with new ones. When this happened, citizens deposited cash into bank accounts but all of it was not taken out. Today, most of the bank branches are cash-free and it is difficult to find a bank that accepts cash. Only ATM machines - they are rare too accept and dispense cash.
Sweden’s central bank is also planning to launch a digital currency, which will mean that people will have to depend less on banks.
Surprisingly, there is some muted opposition in the country towards cashless society. There is what is described as Kontantupproret (cash rebellion), the protagonists of which say they are concerned about identity theft, rising consumer debt and cyber attacks. More surprisingly, the movement is led by a former head of police and retired people are the activists. However, it is seen as a concern of the elderly people, who want to know what could be done in case there is a breakdown of the internet or there is disruption of the electricity supply.
As India makes its push towards digital, Sweden is indeed a worthwhile case study.