With the help of technology, Sweden is on its way to becoming the world's first cashless society.
Researchers from Stockholm's KTH Royal Institute of Technology attribute this impending change to the country's embrace of IT, as well as a crackdown on organized crime and terror, The Business Insider reported.
Niklas Arvidsson, an industrial technology and management researcher at KTH, says that the widespread and growing embrace of the mobile payment system, Swish, is helping hasten the day when Sweden replaces cash altogether.
"Cash is still an important means of payment in many countries' markets, but that no longer applies here in Sweden," Arvidsson said. "Our use of cash is small, and it's decreasing rapidly."
In a country where bank cards are routinely used for even the smallest purchases, there are less than 80 billion Swedish crowns in circulation (about EUR8 billion), a sharp decline from just six years ago, when the total in circulation was SEK106 billion.
"And out of that amount, only somewhere between 40 and 60 percent is actually in regular circulation," Arvidsson said.
The rest is socked away in people's homes and bank deposit boxes, or can be found circulating in the underground economy.
Swish, a direct payment app that's a result of collaboration between major Swedish and Danish banks, is used for transactions between individuals in real time.The service's direct collaboration with Bankgiro and Sweden's national bank, Riksbanken, is a critical factor in its success.
But if Swish starts to be used on a larger scale and grow to include retail transactions and e-commerce, Arvidsson says it is likely the country's entire payment system infrastructure will have to be revamped.
That may not be as prohibitive an idea as it sounds. Arvidsson says Swish is already revolutionizing the banking system, which itself is no stranger to bold digital projects.
With digital giro systems, early electronic payment services and other advances in online financial services, Swedish banks have been early adopters of advanced IT systems, he says.
"Combined with a strong IT sector, this has led to more competitive financial services in Sweden. The success also depends on the Swedish consumer tradition of welcoming electronic payment services," he said.
Whether cashless societies spread beyond Sweden is another question.
"Swish is a brilliant idea, but to introduce it internationally is a challenge, not least because it takes a long time to change other countries' banking systems from scratch. But it is not impossible that a Swish-based banking revolution can also occur abroad," Arvidsson said.
