Cashless economies

It's Not About the Money

Portrait of cafe waiter with card machine behind counter
Put your money away: Card machines are a rare sight in Germany. Source: DPA

The name of its currency may translate as crown, but in Sweden, cash is no longer king.

Use of notes and coins is rapidly falling in the Scandinavian country as it phases out cash in favor of electronic payments. Today, less than 78 billion Swedish krona (€8.4 billion) is in circulation, down from 109 billion krona just six years ago.

The move towards a cashless society has got to the point that many shops have signs that say “We prefer credit cards.” Some supermarkets even refuse to accept cash, or only accept exact payments as they don’t give change.

Stockholm’s public transport network no longer takes cash, either. And if you’re trying to pay cash for a parking ticket, forget it: meters were converted to cashless payment years ago.

In fact, around 80 percent of retail payments are made via cards, according to the Swedish Chamber of Commerce.

“People love their cash, it’s a cultural tradition in Germany.”

Michael Kemmer, managing director, Association of German Banks

“The speed with which this is happening surprised us all,” said Johan Widerström, head of the small Kinda-Ydre savings bank in southern Sweden. “I can understand that many customers can no longer keep up with it.”

Across the Baltic in Germany, things are rather different. The equivalent number of retail payments made using cards is just 51 percent, and when it comes to physical shopping, so excluding online purchases, almost 78 percent of Germans still pay in cash, the EHI Retail Institute found in its latest study. And two years ago the number of cash dispensers reached a record 58,000.

In short, Germans are unlikely to accept a Swedish-style electronic payment revolution any time soon, even if a recent Allensbach poll showed a majority of those aged between 30 and 44 could imagine paying by card rather than cash. “People love their cash, it’s a cultural tradition in Germany,” said Michael Kemmer, managing director of the Association of German Banks.

The main reason for this is that Germans view the use of cold, hard cash as a freedom. Politicians and bank officials like to sum up the mentality by quoting the Russian novelist Fyodor Dostoyevsky, who famously said: “Money is coined liberty.”

But Germans may have to move with the times. Many EU countries have now introduced cash transaction limits of as little as €1,000 (in Italy) to prevent money laundering, for example, and people’s spending habits are changing too. “We stopped cash transactions because we detected a change in customer behavior,” said a spokeswoman from one of Sweden’s biggest banks.

03 p28 No Cash in Sweden-01

They started getting ready for a life without cash five years ago. Now, SEB, Nordea and Swedbank no longer accept cash deposits or permit withdrawals in around 80 percent of their branches. They have also developed the mobile payment system Swish, which allows customers to carry out micro transactions via their phones.

Complaints are not unheard of however, with small, rural retailers often grumbling that they cannot deposit cash takings at banks or have problems getting change.

They may yet be won over by the raw economics, however. The Swedish central bank has calculated that using cash costs the country billions every year. For example, counting money every evening and transporting it to banks results in costs that don’t arise in a cashless economy.

According to research by Sweden’s KTH Royal Institute of Technology, cash payments cost around 0.26 percent of gross domestic product. With credit cards, the costs are far lower at 0.09 percent of GDP.

But pointing out the cost of cash transactions is unlikely to impress Germans. To them, it’s not about the money, it’s philosophical. “We’ll still have cash in 30 years,” said Carl-Ludwig Thiele, a member of the board of the Bundesbank, Germany’s central bank.


Frank Drost is a Handelsblatt editor in Berlin, covering financial supervision and banks. Helmut Steuer is Handelsblatt’s correspondent for northern Europe. To contact the authors:,

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