Toward a Cashless Society?
By Jerry Brownstein
There is a trend toward a cashless economy that has people in many countries worried about issues of privacy and security. Relying on the banks and the government to completely control your finances does not feel safe to many people. But in Sweden these concerns are muted, and it is a good example of how this trend can gather momentum. Cash is now used in less than 20% of transactions in Swedish stores, and total cash payments of all kinds are just 1% compared to 7% in most of the EU and the US. It is an increasingly common sight in Stockholm to see signs in shops and restaurants that say: “We don’t accept cash”. This has started a “ripple effect”, with more and more shops going cashless as it becomes increasingly more socially acceptable.
Small businesses are also going cashless with the help of mobile card readers such as Sweden’s iZettle, which enables even sellers at markets or on the street to take card payments easily. Another popular Swedish innovation is the smartphone payment system called ‘Swish’. It’s an app that allows customers to send money securely to anyone else who has the app, just by using their mobile number. All you need is a phone, a Swedish bank account and your ID number. It is a popular way to transfer money instantly between friends, and over half of the population uses the app.
According to research from the Swedish Central Bank, a big reason that the cashless idea has spread so quickly is that, “Swedes tend to trust banks, so people are not afraid of the ‘Big Brother’ issues or fraud connected to electronic payments.” This may be true in Sweden, but one would hope that people in the EU and US would remember that it was the greed and fraud of the banks in those countries that caused the disastrous financial crash in 2008. There is also the loss of freedom that comes with somebody else controlling whether you have the ability to buy anything. Most people have been in the situation where a perfectly good debit card was rejected by a computer mistake... or an error by the bank... or for an unknown reason. With no cash as an alternative you are helpless. And don’t forget that the government often makes mistakes that can freeze your cards, and again you are left with no alternative but to be a helpless victim.
Trusting your entire financial security to banks and error-prone governments seems foolish, so people in most countries still carry a reasonable amount of cash to pay for every day expenses. However, the younger generations do not seem to value their privacy as much, and are also less aware of the risks of financial impotence. Many do not carry cash - using cards for even the smallest purchases. But even in Sweden the cashless trend is not to everyone’s liking. Bjorn Eriksson, formerly the national police commissioner and President of Interpol heads a national movement called the Cash Rebellion. He explains that, “A cashless system could easily be disturbed or manipulated by cyber attacks or government control. One day your cards just don’t work... and no one can tell you why.
So you are stuck with no money and no alternative to buy even the most basic things.” •