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STOCKHOLM — No cash? No problem — in Sweden at least, where cellphone and credit-card payments are quickly eclipsing coins and bills.
When Robin Teigland left her wallet at home, the man in line behind her agreed to pay for her groceries. His gesture as much out of convenience as kindness — Teigland paid him back immediately via Swish, a mobile-banking app gaining traction throughout Scandinavia.
"Sweden has always been at the forefront of financial innovation,” said Teigland, a professor of business at the Stockholm School of Economics. “I never use cash. My kids laugh at me, because I only carry the five-crown coins I use to get a shopping cart at the store.”
Teigland isn't alone — cash now makes up just 2 percent of the Swedish economy, compared to 9.7 percent throughout the euro zone, according to the Bank for International Settlements.
The move to ditch the dosh has raised alarm bells for some Swedes wary of Big Brother's reach, but makes sense to others like Teigland who have strong faith in the country's financial institutions.
“I trust my bank here more than I do in the U.S.,” Teigland said. “In terms of protecting the consumer, I feel that there are more rules here in Sweden.”
She has plenty of opportunities to avoid using cash. A growing number of retailers are going cash-free and public buses in Stockholm will not take bills or coins. Johan & Nyström, a fashionable coffee chain with locations in Sweden’s largest cities, recently announced it was no longer accepting cash at its stores.
Shoe stores, clothing shops and restaurants are increasingly reliant on card-only or mobile banking transactions, and some — like the brand Swedish Hasbeens — don’t even have cash registers. Customers must pay using cards, or mobile-payments apps like Swish which allows for money transfers directly from a smartphone.
"We found and targeted a totally new segment that previously wasn’t addressed by banks"
In an age where almost everyone carries a smartphone, the convenience of electronic and mobile banking is obvious. Even groups traditionally reliant on cash are learning to go without.
“It started by vendors coming to me saying that people didn’t carry cash anymore. This was a big problem for us,” said Pia Stolt, chief executive of Situation Stockholm, a magazine only available through street vendors drawn from Stockholm’s homeless population. “We realized we had to do something about this.”
The magazine — which costs vendors 25 Swedish krona ($2.97) to purchase — is then sold for 50 Swedish krona ($5.95). Each seller receives the profits from their sales, while the magazine’s offices also serve as a community center for support and services for the homeless. None of this would be possible without an effective salesforce, and the vendors pushed Situation Stockholm to find a way to allow electronic payments.
“We definitely see that more and more people are able to buy the magazine, which is very good for sales,” Stolt said.
Now, each vendor carries a badge with a large number and details on how to pay by phone.
“The customer just puts in the number, and Swish takes 50 crowns from their bank account ... It takes about 10 seconds,” said Pierre Blom, who has sold the magazine for several years. “Without Situation Stockholm, I would be dead.”
Others are finding it more difficult to adapt to the move away from cash.
“Out of ten million people in Sweden, about one million have no Internet connection or don’t use computers every day,” said Peter Sikström, secretary general of SPF Seniorerna, a lobby group for the retired and elderly. “One problem is that many elderly are visually impaired. They can’t see PIN codes, PIN pads, or writing on small screens.”
"For you as an individual there are definitely certain things you don’t want big brother to be watching"
Many elderly prefer cash because it is easier for them to handle: they can feel the amounts involved by the different sizes and colors of bills, whereas with card transactions they are never totally confident they are paying the right amount, Sikström said.
The shift away from cash also unnerves some who worry about how consumer data collected electronically might be used.
“Why should I believe that this information can’t be used negatively?” said Björn Eriksson, former national police chief of Sweden and a former head of Interpol. “What’s the reason for when I buy a suit, I’ll get offers to buy more suits because they have my address?”
Eriksson is worried about the degree to which Sweden has ceded control over its economic life to for-profit financial firms.
“The problem is that we moved power from the central bank to four major commercial banks,” Eriksson said. “They want to earn money — it’s as simple as that.”
Mobile-payments entrepreneurs acknowledge the privacy concerns but say they're responding to consumers' needs.
“We’re not trying to change consumer behavior," said Jacob de Geer, co-founder of the mobile payments company iZettle. "Ultimately, we’re trying to change merchant behavior.”
His company — which counts Visa, American Express and Banco Santander among its partners — makes mobile card readers which attach to a smartphone. IZettle’s app allows retailers to make transactions, create inventories and track sales.
Setting up traditional registers for cash-and-card transactions can be costly and time-consuming for small businesses, de Geer explained. While iZettle’s reader and app are free, the company charges a flat rate of between 2.75 and 1.5 percent for handling transactions. It also provides detailed data on all financial transactions using the app and reader.
“We found and targeted a totally new segment that previously wasn’t addressed by banks. Most of these merchants were too small,” de Geer said.
Still, he stopped short of calling for a fully cash-free society.
“I wouldn’t like to see the end of cash," he said. “Electronic payments are very traceable which is a good thing for tax authorities and governments, but for you as an individual there are definitely certain things you don’t want big brother to be watching.”