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Silvan Frik

By Silvan Frik, Head of Marketing and Communications at SIX Payment Services

Recently I visited Sweden on a business trip.  Everything was going very well until I tried to use a public toilet.  The only way to get in was to send a text from a local Swedish SIM card!

This is an example of how Scandinavian countries have forged ahead with cashless payments, filtering down to just about every level of transaction.  The homeless man on the street selling a magazine called ‘Situation Stockholm’ – their equivalent to The Big Issue – accepts card payments.

Four out of five payments in Sweden are now made electronically or by card and Swedes make these kind of payments at least 260 times a year on average.

Many of the cashless initiatives pioneered in Scandinavia have been replicated across Europe and the rest of the world.  Barely a week goes by without another online payment system launching, whether from the IT giants Apple, Google or Amazon, the telecoms companies, the banks or by corporates such as Starbucks.

So are we heading inexorably for a cashless society?

I don’t think so.  But there are many factors driving out cash, coming from very different origins but heading towards the same conclusion.

In Sweden, the momentum originally came from the unions, seeking to protect their workers from violence during bank robberies in the 1980s.  In this area, there have been exceptional results: just five bank robberies were reported for the whole of 2012 in the country.

Silvan Frik

Silvan Frik

In London, Warsaw and Amsterdam (among other cities), contactless payment systems for public transport have become widespread, if not exclusive.  Customers on London buses can now pay using their credit and debit cards, in addition to the contactless ‘Oyster’ cards introduced a decade ago and now responsible for more than 80 per cent of Londoners’ public transport journeys.  This reduces London Transport’s administration and employee costs.

In my native Switzerland, the government wants to restrict cash payments above a certain level, as an anti-black market measure. The same evaluation takes place in Italy.  Governments everywhere promote electronic and cashless transactions to maximise tax revenues (although some retailers oppose them for the same reason!)

In an electronic society, everything can be observed, checked, followed and stored, whereas cash is anonymous and harder to control.  Governments say that the use of cash leads to illegal behaviour, whereas consumer protection agencies argue that promoting cashless transactions leads to people over-spending.  They have fewer inhibitions when buying things online, or gambling online, than they would if they were handing over cash.

Some consumers are suspicious that card companies or other payment providers are trying to make money out of the data they collect on transactions, which adds to their resistance to go cashless.

But this distinction is changing as each year goes by.  Young people are so used to electronic payments, and to sharing the details of their lives on social media, that they have fewer such qualms.

They are also the ‘mobile generation’, embracing mobile payment technology and the huge increase in convenience, speed and (of course) mobility that this entails.  New products such as Barclays’ Pingit, the Swiss Tapit payment app or the Swedish Swish app all facilitate mobile payments.  The mobile phone is fast becoming the wallet.

Yet this is only the first step in a fast-evolving process.  We will soon see more peer-to-peer payment systems emerging, where payments can be transacted through SMS, or PayPal, Google, or a host of other technologies and platforms.

As soon as these kind of payments can be made widely, across borders, then the whole payments landscape will begin to change.

Meanwhile, there are all kinds of signs that cashless payments are becoming more popular.  In the UK city of Manchester, one shopping district recently held a ‘cashless’ day, sponsored by a card payment terminal provider.

Some retailers found it a positive experience – “People were talking about it and keen to take part in the idea,” said Claire Lockhart, who runs a local pub – whereas others were less happy, because they didn’t want to put off customers without bank accounts, or older people who are less comfortable with card payments.

Personally, I don’t think that we will ever phase out cash completely, because it has a strong utility, is part of our economic identity and enables a certain degree of freedom.  For quite some small transactions it is still the fastest and most convenient payment method, even when compared with contactless payments.

But the direction of travel is clear: cashless payments will grow ever more widespread, even when you’re looking for a public bathroom.

Global Banking & Finance Review


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