The Daily Telegraph - Saturday - Money
‘Putin could switch it all off’: the fight against Sweden’s move to cashless society
A grassroots resistance movement is holding out against the country’s abandonment of notes and coins, reports Lauren Almeida
It is the Swedish thing to do to have coffee and cake in the morning. It is, however, unusual to be doing so with a former head of Interpol. Björn Eriksson has spent much of his professional life hunting criminals, co- ordinating police forces and running national emergency drills. Now his chief security concern is his country’s erasure of cash.
A table close to the cafe entrance is too exposed for his liking. “I’ve picked another table – somewhere more discreet,” he says, before leading me through three other rooms, up a flight of stairs and into the corner of an empty mezzanine. The cafe is much larger than it appears from outside. “Lots of doors,” he says. “Which is good for ex-police.”
It may seem strange for such a senior former security professional to be involved in the fight to keep coins and notes. Indeed, Eriksson admits his campaign to preserve cash was once a fringe movement, dismissed as a group of “naive” luddites fighting against the tide. Most Swedes stopped carrying cash years ago – note and coin transactions account for around 1pc of gross domestic product.
But Russia’s invasion of Ukraine changed everything. “People started to realise that it is very easy for Vladimir Putin to switch everything off,” he says. “At first we were arguing for vulnerable people, the elderly, women in abusive relationships who rely on cash. They were handicapped by not sitting at the top positions.
“Now we are talking about national security. And it’s not only Putin, it could also be organised crime. Suddenly we have another type of argument, another group of politicians who are entering the scene.”
Legislators across the Continent are beginning to take the matter more seriously: the European Commission has drafted laws that would ensure acceptance of and access to euro banknotes, so that anyone who wanted to pay with cash could do so.
“If the EU makes this decision ... well, the Swedes are known for obeying. The British are a different story,” he laughs.
Britain is not far behind Sweden in its transition to a digital economy – here too cash is disappearing fast. Last year just 14pc of payments were made using cash. A decade ago the figure was 54pc.
But for millions of people this is not just a matter of convenience: it is about a lack of choice. More than 600 banks are due to close by the end of this year, leaving only around 4,000 in the UK. In Sweden, the number of bank branches handling cash has dropped by half since 2017, to around 300.
“It is not about stopping cards,” Eriksson says, as he shows me his wallet, full of plastic. “I love cards and use them a lot, but the key point is we need to have an option. In Ukraine, they have been able to defend their digital solutions. But they would never say ‘ we do not like cash’ because it is important to have different options when the Russians attack. So even a country at war can have cash together with digital.”
Reliance on digital payments could put the whole nation at risk in the event of a cyber attack or electrical blackout, he adds. “When we had exercises in the military system, one problem we prepared for is what if there is an electrical failure. In a hospital, for example, we start rationing electricity so that you can still operate.”
“In Sweden, a big problem would be payments stopping because there was no electricity. We have to prepare for this possibility.” Officials are already trying to prepare the population for a payment blackout. Max Brimberg, an adviser at the Riksbank, Sweden’s central bank, says: “A few years ago the Swedish agency for civil contingency handed out a leaflet to every household informing them of the value of storing emergency cash at home. “People did take this seriously. And we saw after the invasion of Ukraine a significant outflow from our cash depots.”
But in the eyes of many Swedes, digital payments represented the solution for a country that was beginning to feel less safe. A string of major thefts in the 2000s had put the population on edge. In 2009, a criminals stole a helicopter, landed on the roof of a cash depot and stole 39m krona (around £3.2m at the time). In 2006, Gothenburg international airport was evacuated after masked men unloaded foreign currency worth around £700,000 from a passenger plane. Four years earlier a similar robbery at Stockholm’s Arlanda airport netted 43m krona.
The decline of cash would make life safer for bank employees and help push down crime, Swedes believed. But the reality has been different.
“What is happening now is that we have the fastest rising criminality in Europe,” says Eriksson. “We now have so much digital crime – someone could have fooled my elderly mother in two or three minutes to take out everything she owns and get her to do the transactions to a fraudulent account herself. Would you prefer these criminals to take your handbag or all your life savings?”
She stopped carrying cash five years ago. “Nowhere accepts it,” she says. “But it is difficult. I see people my age and older, the first problem they get is that they cannot use their mobile phone because their fingers do not work. So they carry cash but shops do not take it, and banks often don’t take it either.”
This is certainly the case in Stockholm, where few shops accept banknotes or coins. “The only people who bring cash to the shop are tourists,” one baker says. “I feel bad for them because they just take the krona home, where it is useless.”
But around 50 miles away, in the modest town of Strängnäs, some shopkeepers are taking a stand. The region in which it resides, Södermanland, is one of the most cashless in the country with fewer than 3pc of people say they use cash in shops.
In the corner of a shopping centre is an old-school shoe repair shop. Leather boots and belts hang from the ceiling, a tailor works quietly in the back, and Jacob, who runs the store, stands behind a sign by the till: “Kontanter Ja Tack!” it reads “cash is king”.
“We do not accept card payments. We have cash in our society, so I think we should keep it and use it,” he says. “My customers are sometimes annoyed: some of them want to use their card because that is their own view. But sometimes you lose customers for your principles.”
It is only a few older residents in Strängnäs who use the handful of cash machines dotted around the town. In a traditional Swedish cafe, where pensioners are enjoying a daily ritual of coffee and cake, Lea Zetterberg, the young woman behind the till, says only the very elderly pay with cash.
“We take cash, cards and Swish,” she says, referring to the Swedish mobile payment system. “But more and more people are paying with a card. Almost every other shop on this street only accepts cards, so people do not believe we take cash any more. They just pay with a card without even asking.
“I pay mostly with a card or Swish because it’s easiest, especially when you have your card in your phone case. Almost everywhere only takes cards now – even markets on the street will not take cash.”
In most cases, cash is simply more expensive to handle for businesses. Around the corner from the cafe is Harry’s, a men’s clothing shop with teak furniture and mid-century charm. Rolf Wallerström, who has been working in the shop for 64 years and running it for four decades, says even here, where the clientele are older, around 95pc of customers pay with a card. “It’s good for me because the payment process becomes much faster. If they pay with cash I have to take it to the bank personally and it costs money for them to process it.”
It is in banks’ interest to push their customers towards digital payment methods. Payments are an increasingly important money maker: globally, banks made $ 2.1 trillion (£ 1.7 trillion) from payments in 2021, according to the consultancy McKinsey, compared with $1.3 trillion in 2012. The total is expected to rise to $3.3 trillion by 2026.
But the difficulties of a cashless society are not limited to the private sector, Eriksson says. “Around a decade ago a few hospitals said they would not take cash payments for treatments. But there will always be some stubborn Swede or Briton who says ‘I oppose’. There was a man in the southern part of Sweden who insisted he would pay with cash, but the public hospital said no, and he took them to court.”
The administrative court ruled in favour of the man, but the hospital appealed against the decision, arguing that cash payments could be made for
Manager of Harry’s, a traditional men’s tailors ‘If they pay cash I have to take it to the bank and it costs money’ the treatments in two other towns 26 and 12 miles away.
“The hospital lost the appeal and escalated it all the way to the highest court. Yet here too they decided the little man was right: this is the public sector and you must accept legal means of payment.”
Johanna Hållen, of Sweden’s National Pensioners’ Organisation, says uneven internet coverage, especially in the north of the country, means that people in rural areas are at higher risk of being excluded.
“You need a digital key for almost everything – even if you want to visit a public toilet you have to use your phone,” she says. “If you want a ticket on a bus or train you need a phone to buy it. You must identify yourself, as well as have a bank card.
“There are a few places where cash must be allowed, such as pharmacies, food stores, petrol, clothes. Things that are necessary for people, these places should take cash.”
But can Sweden really preserve the right to use cash when so many prefer to use electronic payments?
“In Sweden there is a deep-rooted tradition of freedom of contract,” Brimberg says.
“Every merchant should be able to choose which payment options they see as the most efficient for them in order to be profitable and to have a vibrant society where commerce is encouraged.
“However, from the Riksbank’s perspective we have made it clear we do want some regulation, especially around essentials such as groceries, medical care, pharmacies and petrol. Essentials should be protected so that if something happens, such as an electrical or communications blackout, people should still be able to use physical cash.”
Swedes are also more trusting of their institutions, Brimberg says. “Most Swedes trust both government and private companies, because they trust the government to regulate businesses so they cannot use their personal data for elicit purposes,” he says.
But a growing number of younger people are joining the pro-cash movement, Eriksson says, over privacy concerns. “Youngsters are more worried about the possibility of combining technologies,” he says. “I know, coming from the police, that they can implement all techniques possible, from camera surveillance to wiretapping. You might have a mask on, but the technology is so advanced that I could still penetrate it and register you. It is possible to create a society that is really controlling you.
“That is not the democracy that we live in. But for young people this is a real threat. Look at China or Russia. People say, that is not Britain or Scandinavia, not today or tomorrow – but what about in 20 or 50 years? We do not know.”
JAKE Runs a shoe repair shop in Strängnäs ‘We have cash in our society, so I think we should keep it and use it’