If you stepped outside without your wallet or purse 10 years ago, it might have been a disaster. But today, fintech innovations — from mobile wallets to QR payments — mean all you need to buy things is a phone in your pocket.
The long-predicted cashless society, where cash is abandoned altogether, seems closer to reality. According to a GlobalData report, some markets, including Sweden, the UK and several countries in Asia, have adopted cashless payments quite swiftly over the past few years.
“You have the phone on you at all times, you live on digital platforms, you have social media,” says Johan Strand, CEO of payment platform Zimpler. “That’s where you are and that’s how you want to pay as well.”
However, no country has completely killed old-fashioned cash — yet. We asked the experts and looked at the data to see which European country could be first.
“There’s a global race with which country will be cashless first, and Sweden and South Korea are currently in the lead,” says Strand. “I think we will definitely be the first one in Europe — having a small enough country with enough innovation.”
Data from Riksbank, Sweden’s central bank, shows the percentage of people who’d paid in cash for their last purchase declined from 39% in 2010 to 9% in 2020. Data from Eurostat also shows 82% of the Swedish population makes purchases online.
Strand attributes this in part to the country’s digital identification system called BankID, which Swedes can use to identify themselves to pay securely online, sign documents and complete tax returns. Owned by several Swedish and Scandinavian banks, GlobalData estimates around 80% of the population is signed up to BankID.
Swedish mobile payments system Swish uses BankID. Charlotta Lindblad from Getswish says Sweden’s love of cashless can be explained by “a combination of factors,” including policy reforms, good internet infrastructure and high consumer adoption and trust.
Strand says for a society “to get fully cashless, you need digital identity,” but admits there might be roadblocks ahead. Like getting proper support processes in place to help older people and others who might need help, to signup smoothly. Noting this, he predicts Sweden could be be cashless by 2026.
“To really get through the last mile to have a completely cashless society, there are groups of the population that you need to cater for,” he says. “The last percentage will take time, but, in general, it’ll be five years from now.”
To really get through the last mile to have a completely cashless society, there are groups of the population that you need to cater for.
To get the last percentage of people into the market, Strand says innovative fintechs need to work together with authorities to create solutions. He says the regulatory sandboxes in the UK — where innovations can be tested under the regulator’s oversight — will allow for potentially game-changing new ideas.
“I think those kinds of initiatives on a country level will be very important,” he says. “Having those regulatory sandboxes is something that will really increase the speed of innovation.”
In addition to innovation, the UK has quickly adopted contactless payment cards and online shopping, encouraged particularly during lockdown. 83% of people in the UK now use contactless cards, according to UK Finance.
“We believe the impact of Covid-19 has accelerated the shift from physical to online commerce by two to three years,” a spokesperson from digital payments platform PayPal told Sifted. “A world without cash is safer, more efficient, more transparent and more inclusive.”
A world without cash is safer, more efficient, more transparent and more inclusive.
PayPal says the UK had more than 330,000 daily active users in 2019 — the highest usage in Europe.
The Czech Republic?
Michael Kašpar, CMO of Czech fintech and virtual wallet Trisbee, says going cashless can make it easier and faster to grow businesses.
“The merchant has a complete overview of their money,” he says. “With cashless apps, you can also set up a loyalty programme in a few clicks that will attract more customers.”
Kašpar says Trisbee is now expanding into Italy, Spain and Slovakia.
“The northern European countries are promising places where there will only be cashless payments,” he says.
While she thinks Sweden is closest to becoming cashless according to data, Magdalena Kubisa, director of business development at Polish payment system and scheme BLIK, says Poland could be a contender.
“Although we are still far from countries where cash constitutes a small percentage of all transactions, Poles are increasingly willing to use innovative technologies to pay for products and services,” she tells Sifted. “We pay not only with cards but also with smartphones.”
Kubisa says Poles have always loved shopping online, but holding the country — and other countries — back from being fully cashless are factors including a belief cash is more reliable in times of crisis, an ageing population and concern over cyber-attacks. However, she says the trend is still cashless.
"Recent months have clearly shown that Poles' tastes and habits are changing," she says. "Poland is becoming more and more cashless."
Norway and Finland?
While Strand has placed his bets on Sweden, he thinks other Nordic countries will follow hot on its heels.
“I think everyone is going in a similar direction, but at a different speed,” he says. “I think Norway and Finland will be just behind [Sweden].”
However, Strand warns as countries get closer to becoming cashless, they should pay extra attention to keeping digital payments secure.
“The convenience part of a cashless society is very clear, but as society goes faster and faster we need to keep pushing for payments to be as smooth and friction-free as possible — while also maintaining security.”
The convenience part of a cashless society is very clear, but as society goes faster and faster we need to keep pushing for payments to be as smooth and friction-free as possible — while also maintaining security.
Strand also says it’s important to remember the situation in Europe is not always the same around the world.
“From the stats, cash is growing around the world,” he says. ”We have all these large countries where you go from still having an element of trading goods to being able to pay in cash; it’s easy for western countries to forget about that.”