Swedes set for cashless future

With only 27 percent of retail sales involving a cash transaction, Sweden is adapting to the prospect of cashless future, affecting all from bank-robbers to the homeless.

Peter, 55 years old and homeless, is standing at a Stockholm supermarket, carrying the two objects that help him make a living: a stack of magazines and a debit card reader.

The magazine, Situation Stockholm, is sold by the poor to bring in some income, but for Peter and many other vendors the problem in recent years has been that cash is falling out of use, and passers-by often don't have 50 kronor ($7.80) at the ready to buy a copy.

The card reader, provided by the magazine's publishers, has come to the rescue, and Peter, who asked not to be identified by his last name, couldn't be happier.

"Customers can follow every step so that they don't feel cheated," he said, showing the functions of the device. "I'm impressed by this thing. It's cool."

Mattias Strömberg, a potential customer taking a look at Peter's magazines, welcomed the opportunity to pay with cards: "I never carry cash around. No one does anymore."

In Sweden, only 27 percent of retail sales are made with cash, according to a recent paper by the European Central Bank. If online sales were included, the figure would be even smaller.

All the Nordic countries are rapidly on the way towards a cashless society, deepening an existing divide between north and south in Europe. In Greece and Romania, for example, 95 percent of transactions are still in cash.

Not everyone in Sweden welcomes the transition. In a celebrated case, a would-be robber entered a Stockholm bank, but had to leave empty-handed, discovering that he had picked a cashless bank.

Criminals are not the only ones affected. From Copenhagen to Reykjavik, the cashless society has profoundly changed the ways people live.

Everything from hot dogs to taxes is paid for online, with bank cards, or by SMS. Many buses refuse cash -- confounding foreign tourists -- and the newly opened ABBA Museum in the Swedish capital also only accepts credit and debit cards.

"Neither retailers nor banks have any obligation to accept cash," according to the nation's central bank, the Riksbank.

"We'll probably not see a totally cashless society in the near future, but a society where cash is reduced to a minimum and used in very few situations, is probably quite realistic," said Niklas Arvidsson, a researcher at the Royal Institute of Technology in Stockholm, who published a study on the topic earlier this year.

The big winners are the banks and card companies, but in the end, all of society could benefit as cash is more expensive to handle than electronic payments, he said.

But the elderly and rural citizens, as well as the socially marginalised with high credit risk such as the long-term unemployed, would have problems if cash disappeared completely, he argued.

"If our society goes in this direction, that you basically can't do anything at all without access to debit or credit cards ... it might even create further marginalisation and exclusion," said Leif Öberg, development director at the Swedish Salvation Army, which offers support to people in need.

"The absolute and almost immediate effect ... is that you can't travel by bus. What we see at the other end of the spectrum is that the most marginalised get around on foot ... or travel (by metro) without a ticket, but you can't do that on the bus. That is the stark reality for people today," he added.

There exists an alternative -- pre-paid debit cards that people can later recharge at convenience stores, but with a minimum of 200 kronor ($30) even this can pose difficulties.

Arvidsson also warned that consumers' rights might be at risk as the electronic trail every card user leaves behind could be misused for marketing purposes.

"There is a concern that today's laws are insufficient," said Arvidsson.

"The authorities must ensure that the information is used correctly."

Other losers in the cashless game are smaller shops struggling with high card fees, especially after Sweden implemented a new law in 2010 that banned imposing surcharges on customers for paying with cards.

That means the retailers themselves must deal with the fees to the card-issuing companies -- up to 2.50 kronor per transaction, plus an additional percentage fee.

Since 70 percent of all retail transactions in Sweden are by card, both debit and credit, it adds up to a sizable sum.

Retailers include the fee in the prices of their products, but for smaller shops it's a problem because they don't have the economies of scale and thus have a hard time keeping prices low.

For reasons such as these, Swedish money is not about to go completely virtual.

The Riksbank, which having been founded in 1668 is one of the world's oldest central banks, still plans to launch new banknotes and coins in 2015.

"We believe cash will continue to exist in the near future. We can't foresee it disappearing completely," said Christina Wejshammar, head of the banknotes and coins division at the Riksbank. "It all depends on how we act as consumers."  TheLocal