As the world continues to move away from cash, the behavior of the Scandinavian consumer provides cues to the future of payments. Scandinavia, comprised of Denmark, Norway and Sweden, is seeing an explosion in mobile payments, continued dominance of card payments, and the rapid decline of cash usage.
Market Leader in Eliminating Cash: Sweden
In 1661, Sweden became the first country in Europe to introduce bank notes,1 and is also likely to be the first country in Europe to stop accepting cash. Sweden is the epicenter for the death of cash, with only 1% of the total value of payments in Sweden made in cash in 2016. 2 Businesses and banks are reacting to the preferences of consumers and merchants, and it is now common for businesses in Sweden to not accept cash.
There are multiple benefits of going cashless, including:
- Saving Time: Employees at the IKEA store in Gavle, Sweden reported spending 15% of their time handling, counting and storing money, even though shoppers used cash in less than 1% of transactions. 3
- Saving Revenue: Businesses incur high risk and cost when handling cash. According to the Visa Cashless Cities report, “Businesses lose an equivalent of 4% of their revenues per month due to theft, counterfeit money, and cash register ”4
- Safety: Worker and business safety is higher when companies go cashless. Additionally, going cashless is also safer for banks. Swedish banks have seen a drop in robberies by 99% between 2008 –
Strength of Card Payments
The dramatic growth of mobile payments has not dampened Scandinavia’s appetite for card payments. Per capita, Scandinavians have the highest usage of card payments globally with Norway leading the pack at 475 card payments per average consumer each year.6 The card schemes have built an incredible infrastructure of acceptance and trust, which enables Scandinavians to use their cards within the region and abroad. Moreover, the card schemes are moving beyond swiping and dipping cards to contactless pay.
Contactless pay enables a consumer to make a payment by waving a card or device in front of a card reader. Contactless pay is secure, convenient and enables the consumer to quickly complete the transaction. Contactless pay is in its infancy, but as more merchants enable this payment method and consumers learn about it, usage of contactless pay will exponentially grow. Contactless pay will fare the best in quick-low dollar transactions, including transit. Merchants will embrace it on a wider scale considering its acceptance rate is 10% higher than the traditional magnetic swipe.7 Contactless pay is not unique to Scandinavia, yet Scandinavians will likely be quick to embrace this payment method. In 2018, Norwegians utilised Contactless pay for 4.5% of transactions at physical terminals; however, this will likely scale to over 50% with three years.
Mobile Payments Explosion
Across Scandinavia, three popular domestic schemes are leading mobile growth: Vipps in Norway, Swish in Sweden, and Mobile Pay in Denmark. In 2018 alone, Norway’s Vipps users conducted 141 million mobile payments totaling 67 billion Norwegian Kroner which represented a 55% annual growth.9 Scandinavia’s mobile payment schemes are experiencing a network effect where the increased number of scheme users, increases the value of the scheme. Vipps’ market penetration is at 75% 10, Mobile Pay is at 90% 11 and Swish is at 69%.12
Scandinavians have naturally embraced electronic payments, but for many jurisdictions the biggest driving force towards a cashless society is governmental policy. Cash intensive businesses pose a higher risk for tax evasion and risk of money laundering. Many governments have enacted cash restrictions to reduce the likelihood of illicit activity. This has pushed more consumers to embrace electronic payment methods.
The payment trends in Scandinavia will not be carbon copied across the world. There will be nuances including some jurisdictions drive towards embracing alternative payment methods. However, the general rule is that we are moving towards a cashless society.
2 “Why Sweden is close to becoming a cashless society,” https://www.bbc.co.uk/news/business-41095004
4 “Cashless Cities,” https://usa.visa.com/dam/VCOM/global/visa-everywhere/documents/visa-cashless-cities-report.pdf
5 “Swedish banks have seen a drop in robberies by 99% between 2008 – 2017”, https://www.nytimes.com/2018/11/21/business/sweden-cashless-society.html
6 https://static.norges-bank.no/contentassets/4716368f47354bd8a3a0c392a4dd59b6/nb_papers_1_19.pdf? v=05/22/2019111121&ft=.pdf
7 https://usa.visa.com/run-your-business/small-business-tools/payment-technology/contactless-payments.ht ml
8 https://static.norges-bank.no/contentassets/4716368f47354bd8a3a0c392a4dd59b6/nb_papers_1_19.pdf? v=05/22/2019111121&ft=.pdf
9 https://static.norges-bank.no/contentassets/4716368f47354bd8a3a0c392a4dd59b6/nb_papers_1_19.pdf? v=05/22/2019111121&ft=.pdf
10 https://www.independent.ie/business/world/norwegians-stop-using-cash-as-vipps-payment-app-thrives-38 161720.html