People are increasingly using electronic forms of payment such as cards and mobile phones rather than cash. In parallel with this, figures from EDB ErgoGroup show that cash withdrawals from minibanks have fallen by 25% over the last five years.

"In just a few years' time, mobile phones will be very much the dominant payment method. We have so far seen just the beginning of technological development in this area, and we expect explosive growth over the next few years. Thanks to the variety of wireless technology now emerging, payment by card and payment by mobile phone are beginning to merge into one payment method. The mobile phone is becoming our new wallet. In the future, when we want to make a payment in shops, street kiosks, restaurants and the like, we will simply wave our mobile phone past an electronic reader", explains John-Arne Haugerud, who is Deputy CEO of EDB ErgoGroup and is responsible for business development.

EDB ErgoGroup is one of the largest Nordic IT companies, and provides solutions and services for a major part of the Norwegian banking sector, including internet banking, minibanks and various forms of payment technology. EDB ErgoGroup is also a major supplier of services for the telecommunications industry.

Many Norwegians have already stopped carrying any cash in their wallet

34% of respondents answered 'yes' to the question: "Do you expect to see notes and coins disappear as a means of payment?" Analysing the response by gender shows that 37% of men and 31% of women expect to see the use of cash disappear. This is one of the results of a study of payment behaviour carried out for EDB ErgoGroup by the market research company Synovate. 64% of respondents did not expect to see cash disappear, while 2% were undecided.

45% of respondents said that they normally carry either no money or less than NOK 200. 11% said that they usually did not carry any cash at all. The proportion of respondents who carrried no money was higher for men (13%) than for women (8%). The age group with the highest proportion of respondents carrying no money was 25-39 (18%).

"These people form a group of the population that has already got used to a new cashless reality, and they can be seen as pioneers for the payment methods of the future. This is the same trend that we saw when we launched minibank systems, internet banking and the like: a small group of the population was quick to adopt the new technology, and the rest of the population then followed on. In the same way, we expect to see the majority of consumers become cash-free in the near future", says John-Arne Haugerud.

New technology offers new opportunities and a new reality for consumers

Consumers can look forward to exciting times ahead for the way they shop and make payments. The process of developing new types of payment card has for quite some time included work on making it possible to use cards for more than just making payments.

In addition, technology has been developed for prepaid cards that allow the user to transfer a specific amount to a card that can then be used without a PIN code or any connection to a bank account. Examples of prepaid cards include gift cards and cards for small payments without using a PIN code.

The latest smart phones now incorporate technology for high-speed wireless communication over short distances (Near Field Communication or NFC).

This makes it possible to use a handset to make a payment simply by waving the handset past a payment terminal in the shop. However, the practical use of these solutions will be dependent on upgrading or replacing the electronic infrastructure currently in use.

"It is only a matter of time before this happens. Technological development has already progressed so far that Norwegian consumers have little need for notes and coins. Even at a toll station on a road in the middle of the mountains, or when buying a soft drink or chocolate bar from a vending machine at the station, you can now pay electronically rather than using notes and coins. Cash in the pocket, at least in the form of notes and coins as we know it today, will disappear as the new technology becomes available and enough customers are happy to adopt it", says John-Arne Haugerud.

Increasing use of internet banking

The number of customers holding internet banking account agreements with Norwegian banks is now close to 5 million. This figure is estimated by EDB ErgoGroup on the basis of the company's statistics for use of the various banking channels in Norway in 2010. Over 4.9 million internet banking account agreements were in place at the end of 2009, while the comparable figure for the end of 2003 was just 1.7 million. Over the intervening years, virtually the entire Norwegian population have become internet banking users.

Over the last 10 years, the age of the average user has increased from 30 to 42.5 years. Monday is on average the busiest day for internet banking, with the busiest times between 10:00 and 11:00 and between 21:00 and 22:00. The busiest month of the year for making payments is March.

The busiest single day for internet banking in 2010 was Tuesday, 24 June, which was the day when the tax authorities refunded over-payments for the previous tax year. The oldest internet banking user in Norway is a man of 102 years, and the youngest is a boy just one year old. The number of bills paid by internet banking increased by 5.6% in 2010, and well over 90% of bill payments in Norway use internet banking.

Fewer cash withdrawals from minibanks

Just over 70 million withdrawals were made from Norwegian minibank terminals in 2010. This represents a decline of 25% since 2005. However, the average amount withdrawn continues to increase. The average cash withdrawal in 2010 was NOK 1,276 kroner as compared to an average of NOK 1,239 in 2009.

Friday afternoon is the busiest time for Norwegians to use their cards to withdraw cash. On Friday, 14 May, cash withdrawals from Norwegian minibanks reached NOK 501 million, making this the busiest day for cash withdrawals in 2010.

"We are very keen to offer new services through minibanks in pace with these changes in consumer behaviour. Examples of this are top-up services for mobile phones, paying-in services and ATMs designed for people with disabilities", says John-Arne Haugerud.

Mobile banking users

More and more Norwegians are also using mobile banking services, such as mobile phone banking, banking applications (apps) for iPhones and other smart phones, as well as SMS services, to supplement their internet banking.

"We have seen strong growth in the use of banking applications for smart phones since we launched the service about a year ago. The mobile banking application was top of the list for financial apps downloaded to iPhones for quite some time", explains John-Arne Haugerud.

While internet banking is used most in the morning and evening, usage of mobile banking services is spread more evenly throughout the 24-hour day. The busiest period for mobile banking is between 16:00 and 17:00 on Fridays. The busiest single day of 2010 for mobile banking was Thursday 9 December.