The message is clear at EBAday 2019: Sweden does not accept cash. While the ABBA Museum may prefer card or mobile payments, Frantz Teissedre, head of interbank relationships at Société Générale, believes that a purely cashless society across Europe may be ambitious.
The introduction of Instant Payments, Request to Pay and mobile payments has led to a seismic increase in the use of debit cards in Europe, but two billion cheques are still in circulation and each year, there is a 10% increase in the number of banknotes being issued.
“Cash is not only a means of payment, it is a reserve of value. A third of European bank notes are in circulation within the Eurozone, a third are in circulation in other regions, but the final third has disappeared,” Teissedre explains that some citizens continue to keep cash at home.
Teissedre adds that cash also promotes social inclusion and allows those without the means to access technology to manage their money. On the other hand, cash also permits citizens to “pay less” because there is no moral judgement involved in the use of physical currency.
“In an economy where there is high unemployment and high fiscal pressure, people use cash for tax evasion as they don’t want to pay VAT. When a major payment system fails, the only thing that remains is cash and coins. Cash is freedom in a society in which we are hesitating to give data and don’t want to be traced.
“A purely cashless society won’t work because people don’t change their habits overnight. We need all parts of the ecosystem to be convinced, like in Sweden and move together,” Teissedre says. Anna-Lena Wretman, CEO of Swish, puts forward the Swedish perspective and explores the drivers that have encouraged the Nordic country to become a near-cashless society.
Wretman asserts that while new technology and regulation has driven usage of modern payment methods, to return to the subject of tax, Sweden has tackled this problem with a cash register law, where every shop has a black box from the tax authority.
In addition to this, despite Swish being lauded as a changemaker in Sweden, she points out that the platform has only transformed peer-to-peer payments, and card remains the most efficient and preferred form of payment when making purchases.
Picking up on points made on inclusion, Henrik Bergman, director financial infrastructure at the Swedish Banking Association, believes that the significance in innovative forms of payment lies in educating all users how to use Swish, for example.
Banks are pressured into implementing new legislation to ensure that cash remains in circulation, but Bergman asks: “who is going to use it? Customers aren’t and merchants don’t want to handle it.” We need to do it together, banks alone cannot manage it.”
Charlotta Wark, vice president, head of banking Sweden at CGI continues this conversation and states that there is a danger in not following “society or population driven change. If citizens of one country have decided that one way [of payment] is easier and [banks] don’t provide the means of doing it. Guess what? Facebook will do it for you. Then you’re in a situation where you’re no longer in control.
“The tech giants would like to provide these services free of charge because they see this as increasing the benefits of their platform in general. We don’t have a choice, we have to provide the digital infrastructure citizens are asking for.”