When it comes to cash is less always more?

20 Sep 2017

  • East to West, people rely less on cash and increasingly use digital payments

  • The Swedes use cash least of all, but Sweden now faces policy concerns from rapid decline in cash

  • Cash use in Australia is also declining, can we learn from the Swedish experience?

Source: Sveriges Riksbank


Point of View


In Sweden, 20 per cent of the number and 1 per cent of the value of payments were made using cash in 2016, according to the Sveriges Riksbank, Sweden’s central bank. More than half of Sweden’s population use Swish, the mobile P2P instant payments system launched in 2012.


Recent surveys by BRC and Paysafe found that Britons use cards more frequently than cash, contactless makes up nearly a third of card payments and people hold less cash than a year ago. Similar observations were made in Canada and the US.


While cash makes up around 60 per cent of payments in Singapore, the government is pushing for digitisation and the central bank taking a series of initiatives to move the country to an ‘e-payments society’. These include establishing a Payments Council, supporting roll out of interoperable point-of-sale terminals to merchants, and face-lifting streamlined payments solutions (e.g. PayNow, a bank-owned instant P2P funds transfer service).




The widely observed trend of increasing digitisation and reduced use of cash is typically framed in a positive light. Ranging from shorter wait times, better security and more convenience, to less crime and tax evasion, the outcomes of ‘less cash’ are indeed encouraging. However, can less cash also lead to less desirable outcomes?


Although Sweden has been the less-cash poster child for quite some time, concerns about the increasingly low level of cash have arisen in the Scandinavian nation.


The Riksbank recently noted that the “…trend towards a cashless society could ultimately make society vulnerable…”, as it could lead to a concentrated payments market and reduced competition. The Swedish central bank also noted that “…there are certain groups that at present do not have the opportunity to use digital payment solutions…”


Some commentators in Sweden are in agreement. Bjorn Eriksson, who is the founder of Cash Uprising – a “loose coalition for the preservation of cash”, to quote The New Yorker – is concerned that “…about a million people can’t cope with cards.” (Although, it ought to be noted, Mr Eriksson is the chair of an industry association that represents armoured vehicles; and cash is transported in this kind of vehicle.)


In Australia, consumers continue to use less cash. Participants in the Reserve Bank’s 2016 payments study made 37 per cent of their payments using cash, compared with 47 per cent in 2013 and 69 per cent back in 2007. However, the Reserve Bank maintains that cash continues to be an important part of the payments system as it is still used for a significant share of consumer payments and as a store of value. Reflecting this, it is in the process of upgrading existing banknotes.


The Reserve Bank has also identified that, ceteris paribus, continued decline in the use of cash would likely increase the average per-transaction cost of cash payments. It notes that this could lead to the private sector being less inclined to supply cash-distribution services, and has said it will continue to monitor cash distribution to ensure the cash needs of the community continue to be met. In a recent speech, Victoria Cleland, Chief Cashier and Director of Notes at the Bank of England, spoke to similar observations in the UK.


In Sweden, these concerns have materialised. Banks have reduced cash handling so quickly that it has become a policy issue, with the Riksbank urging parliament to introduce a legal obligation for banks to provide cash services. While this might raise concerns domestically, there are a number of differences between the cash environments in Sweden and Australia:

  • Australian consumers use cash nearly twice as frequently as Swedes, at 37 per cent of payments compared with 20 per cent.

  • The stock of Swedish banknotes has been declining for a decade, while Australia continues to experience strong growth in the demand for cash as observed in most other countries.

  • The number of ATMs in Sweden is declining, with a drop of nearly 17 per cent between 2012 and 2016. Over the same period, the number of ATMs in Australia grew by 5 per cent.

  • Lastly, Swedish people have voraciously embraced Swish – nearly half the population use it. But Australians have yet to begin the instant P2P payments journey.

Although declining use of cash in Australia seems likely to continue, does it mean we are destined to meet the same fate? Is Sweden simply further down the path to less cash than we are? Or perhaps the Nordic nation is truly an outlier when it comes to cash. Either way, there are bound to be lessons Australia can take from the Swedish experience, particularly in light of developments in the ATM system and with the New Payments Platform launching next year.



The opinions and views expressed in this publication are those of the authors exclusively and do not purport to reflect the opinions, views or official policy position of AusPayNet or its members.


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