Three stories have really excited my interest this week. And no, it’s not the Burberry ad campaign nor all those pre-fall collections. Instead it’s:
- Robots are becoming a significant consumer spending sector.
- John Lewis is at least one bricks-and-mortar retailer that expects its online sales to be bigger than store sales within four years.
- And the one that this story is all about – cash is becoming an increasingly rare commodity on the shopping streets of Sweden.
Think about it, that trio of stories is real world-of-tomorrow stuff, the kind of developments people, say 50 years ago, expected to happen sooner. But back then they also expected us to be walking around wearing silver space suits and driving flying cars.
The fact is that we still do normal stuff (wearing jeans, driving cars, doing the dishes, taking the dog for a walk, watching sitcoms…). But the future has crept up on us, if not imperceptibly, at least very fast and in ways we didn’t always expect.
So, to the point of the story. In Sweden, cash is no longer king, according to a new report. If you ask people on the shopping streets of Stockholm when they last paid for something in cash, many have to think a bit. Was it yesterday, or perhaps last week?
Digital payments via card or mobile app have become so widely accepted that many Swedes no longer carry cash at all. Indeed, there’s such a high level of trust in the digital transaction system, even children often pay with their debit cards.
And perhaps it’s that level of trust that’s key – such a situation may take longer to happen in countries like the US or the UK. There even the most digitally-focused millennial still worries about trusting their entire financial life to a card or an app and many parents would be horrified at the thought of giving little Jack or Amy a debit card.
While card and other digital payments are key for retail sales in many other countries too, a scenario where consumers would leave the house without any cash is still some way off. Cash is still a must-have and there are still situations where you’d be laughed at for offering payment via a digital alternative.
But not in Sweden. According to the study from KTH-Royal Institute of Technology, Sweden can currently claim to be the world’s leader in cashless trading. “Our use of cash is small, and it’s decreasing rapidly,” said Niclas Arvidsson, researcher and author of the study. “Cash is still an important means of payment in many countries’ markets, but that no longer applies here.”
What this video to find out more, or read on…
In the retail industry in Sweden, about 80% of all transaction are made by cards and this number is increasing, Bengt Nilervall, Head of Payment Systems at the Swedish Trade Federation, said. He added that “we have a big trust in the government, the system, the banks, and the authorities.”
According to the study, in Sweden there is less than SEK80bn (about €8bn) in circulation, a sharp decline from just six years ago, when the total was SEK106bn.
For most private consumers, being able to pay with a card or via the very popular mobile payment app Swish, is convenient, secure, and free. Cards are used for purchases both small and large, and there are many instances where only digital payments are accepted.
Not everyone is convinced, of course and older consumers, plus people who live in rural areas still cling to cash, as does anyone who prefers the anonymity it permits.
On the retailer side, it seems that most welcome the security and convenience of cash-free sales. For small businesses and street vendors, the Swedish iZettle mobile payment solution for cards, or mobile app Swish, allow for easy payments.
But as with traditional credit card transactions, the new digital solutions are also starting to charge fees for businesses, frustrating some vendors who must cover such costs, even for small purchases.
That aside, it’s a model of the future that’s actually working (and working well) today.