Sweden: Where cash will never be king

Could Sweden become one of the first cashless societies in the world? Probably, says a researcher at the Royal Institute of Technology. Here's how, and why.

Sweden: Where cash will never be king

Sweden recently got a brand new set of bills, sporting historical Swedish heroes and looking better than ever. There's also a new 200 kronor note, whereas before it leaped from 100 to 500.

But the new wave of cash is a little ironic, given that Sweden is well on the way to abolishing cash entirely. So why come out with more of it now?

“The decision to bring new notes was made five years ago,” says Niklas Arvidsson, professor at the Royal Institute of Technology who researches cashless society.

He says that there were multiple reasons for renewing the currency, including better security and avoiding counterfeit problems. And despite Sweden's long-lasting love affair with digital payments, Arvidsson says it will probably still be another decade before Sweden is entirely cashless.

But it's already quite close. In Sweden only about 20 percent of store transactions involve cash – compared with 60 to 80 percent in most other countries.

Not even many Swedish banks deal much with cash these days. “Cash carries an increased risk of robbery, and administrative costs,” Arvidsson explains. “The banks which do accept cash require that you explain where the cash has come from, to ensure it is not laundered or financing terrorism.”

Read more about the new Swedish bank notes

At this rate, Sweden may become one of the first cashless societies in the world, according to Arvidsson's research. He recently published a paper studying the Swedish electronic payment system Swish – which he says is one of the largest cash-killers.

Sweden was one of the first countries to join the electronic revolution, launching e-bills and payments, electronic bank accounts, and mobile banking.

“Swedish banks are good at joining advanced IT systems early, and in combination with a very strong IT sector, that has led to multiple competitive financial services.”

Swish is the next development, launched in late 2012.

Stockholm in spotlight for financial tech

“Cash is still an important payment method in many countries, but not here in Sweden anymore,” he says. Today there is some 80 billion kronor in cash circulating in Sweden – but in 2009 that number was 106 billion. And it continues to drop quickly. “

And only about half of that is circulating regularly,” he says.  “The rest is sitting at someone's home or somewhere on the black market.” 

In order for a society to truly go cashless, everyone in the society needs to be able to use the new, in this case digital, method. That includes older generations who may not be as familiar with modern technology, as well as those who live on the countryside.

The app Swedish is so simple to use, though, that Arvidsson says it is already conquering the hearts and wallets of cash users.

Another potential challenge of a cashless society faces homeless and paperless migrants: If there is no cash to give, they are (literally) left out in the cold.  But of course there are benefits as well. A digital, cashless society is simpler, more cost-effective, and more open, since transactions are easier to track.

If Swish's popularity continues to grow as quickly as it has, then it could entirely replace cash.

“Swish is like cash in the sense that it is a direct payment which occurs in real-time,” Arvidsson elaborates. “The system's biggest strength is how fast and simple it is.”

Read also: Sweden close to being a cashless society

Currently most Swish transactions are between private users, but stores and online boutiques are starting to try it out. The infrastructure may have to rebuilt to handle the shift to industrial use, but Arvidsson says it probably won't be a problem.

“Swish is already revolutionizing the entire essence of Swedish banking.”

Swish works together with the Swedish bank, Riksbanken, in order to carry out its transactions in real time. And that is a critical aspect of the app's functioning. Without that kind of cooperation it would be impossible – which is why it may be tough to export the Swish model to other nations.

“It's a great idea, but it will take a long time for other countries' bank systems to change from the ground up,” he says.  “But if they figure that out, Swish could lead an international revolution.”


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Cost of living: How expensive is Sweden compared to a year ago?

Those living in Sweden have no doubt noticed that things have become a lot more expensive over the past year – but just how much more expensive is life in Sweden than a year ago?

Cost of living: How expensive is Sweden compared to a year ago?

How much does fuel cost?

This depends on what kind of fuel you use – a litre of ethanol for example costs around half that of HVO100, a renewable alternative to diesel. All the prices listed below were the average price on August 10th, 2023.

For those using petrol, specifically Bensin 95 (unleaded petrol), the price per litre on August 10th was 20.89 kronor, compared to 19.33 kronor per litre a year ago.

The price of ethanol, also sold under the name E85, has remained relatively stable over the past year, standing at 15.10 kronor per litre on August 10th, compared with 15.87 kronor per litre in August 2022.

Diesel prices are a bit higher at 24.36 kronor per litre in August 2023, up from 22.91 last year.

Finally, the price of HVO100 is around 30.67 kronor per litre this month, up from 28.87 in 2022.

What about energy prices?

Energy prices are in general lower in summer than winter, especially given the wet and dreary summer Sweden has had, which has been good news for wind and hydropower.

The most recent figures available are from July 2023, and prices vary depending on which energy price zone you live in. All prices here are rörliga or variable monthly rates – not hourly rates – and they don’t include VAT, so the actual amount on your energy bill will be higher.

We’ve used prices from Vattenfall, one of Sweden’s largest energy producers.

Energy zone 1 – the cheapest energy zone – is in the far north of Sweden, and it includes Norrbotten county and part of Västerbotten county.

Prices in zone 1 last month were around 47.93 öre per kilowatt hour, higher than the 31.61 öre per kWh consumers in energy zone 1 paid last year.

Energy zone 2 is slightly further south, and it includes Jämtland county, Västernorrland county, and parts of Gävleborg and Västerbotten counties.

Prices here were similar at 47.95 öre per kWh in July compared to 31.64 öre per kWh in 2022.

Energy zone 3 covers central Sweden, encompassing Stockholm and Gothenburg, as well as Stockholm county, Södermanland county, Uppsala county, Värmland county, Västmanland county, Örebro county, Östergötland county, Dalarna county, and parts of Halland, Kalmar, Jönköping, Västra Götaland, and Gävleborg counties.

Here, prices were extremely high at this time last year – a whopping 100.89 öre per kWh in July 2022 – although the figures for this year are much lower at 48.66 öre per kWh.

Energy zone 4 – the most expensive zone – includes Malmö, Skåne, Blekinge, Kronoberg, and parts of Kalmar, Halland, Jönköping and Västra Götaland counties.

In July year, users in this zone were paying an eye-watering 137.58 öre per kWh, with this year’s figures a much more reasonable 52.78 öre per kWh.

There’s also some good news for Swedish households this autumn as prices are not expected to be anywhere near the levels seen last year, mainly due to water reservoirs (crucial for hydropower) being well-filled by the recent rain, and also due to well-stocked gas reservoirs in the rest of Europe cutting the continent’s reliance on Russian gas.

Of course, this may change, especially if the war in Ukraine worsens, but for now at least, it seems like Sweden is in for a cheaper winter on the energy front this year than in 2022.

How are property prices faring?

Over the past three months, the average price of an apartment in a housing cooperative – a bostadsrätt – was 43,608 kronor per square metre, according to Svensk Mäklarstatistik, an organisation that keeps data on the real estate market.

The average sales price of apartments across the country over the same period was 2,787,000 kronor, with prices highest in Stockholm, Gothenburg and Malmö, and lower elsewhere.

When it comes to the price of detached homes or villor over the past three months, sales prices have been lower, at 30,100 kronor per square metre, although the average sales price was higher, at 3,714,000 kronor.

Compared to last year, apartment prices are down 2.4 percent from 43,092 kronor per square metre and an average sales price of 2,767,000 kronor. The decrease is even larger for detached houses, which have gone down 10.2 percent in value in the past 12 months from a price per square metre of 29,547 kronor and an average sales price of 3,689,000 kronor.

Of course, that doesn’t say much about how much housing costs have increased for the average person in Sweden.

The Financial Supervisory Authority’s most recent report on housing costs for mortgage holders in Sweden is from March 2023, and it indicates that households in Sweden spend on average 12 percent of their income on interest rate payments, which is 2 percent higher than in 2022, and also the highest figure measured by the authority since records began in 2012.

The key interest rate has increased by 0.75 percentage points since March 2023, so this number is now likely higher.

This does not take into account the cost of paying off a loan – amortering – with government regulations stipulating that households must repay between 0 and 3 percent of the total value of the loan per year, depending on how large their loan is in comparison to their yearly income, and how large their cash deposit was in relation to their mortgage.

In terms of rental properties, the Swedish Tenants’ Association which is responsible for negotiating first-hand rentals, has agreed rent hikes of around 4 percent, on average, compared with last year.

For people in second-hand rentals, landlords are able to set prices at a level which covers their own mortgage costs – so it is likely that prices have gone up in line with increased interest rates for property owners.

How much have food prices gone up?

It’s difficult to say in kronor how much food prices have increased, as your food shop depends so much on the exact products you usually buy.

Instead, we can look at the general percentage increase of a number of items across all the largest chains, which is exactly what food price comparison site Matpriskollen has done.

According to the site’s statistics, food prices went up by 0.2 percent month-on-month in July. Price hikes were recorded on 20 percent of the 43,000 items measured, while 9 percent of products decreased in price. The majority of products – 71 percent – stayed the same price in July.

On a yearly basis, food prices have increased by 9.5 percent. Looking back to January 2022, when prices first started going up, the price of food has gone up by a whopping 21.6 percent.

So, how much more expensive is it to live in Sweden than it was a year ago?

The best way to look at this is by using the figures for inflation, collected by Statistics Sweden. The Consumer Price Index (CPI) is the standard measure for inflation in Sweden, which measures the average change in prices paid by consumers over a set period of time.

Figures for July or August have not yet been released, but the most recent CPI figures in June indicate that Sweden became 9.3 percent more expensive between June 2022 and June 2023.

CPIF inflation – the consumer price index with a fixed interest rate – is slightly lower, with an increase of 6.4 percent between June 2022 and June 2023.