For years, there has been a clear trend among Norwegians avoiding making cash payments and using banknotes altogether. Now, a new survey has found – unsurprisingly – that Norwegians prefer to avoid paying with cash in physical stores.

According to the Klarna survey, only about one in ten Norwegians (11 percent) prefers to pay with cash. For context, in Germany, the share of those who prefer to pay in cash was 42 percent, while in Austria, 41 percent of survey respondents stated they were more fond of using cash.

Although a clear majority of Norwegians prefer to pay by card, the number of those who prefer to pay via mobile phone (24 percent) is also higher than the number of those who still like to pay with cash. 

So, what exactly has led Norwegians to steer clear of using cash?

The Covid-19 effect

There are multiple reasons why Norwegian citizens – as well as a number of companies, organisations, and institutions – are turning away from using cash.

One of the key catalysts in this transition was the pandemic. According to Vipps, contactless payment tripled in 2020, and, at the same time, Norway’s Central Bank announced that cash use in Norwegian society was at an all-time low.

During the pandemic, a lot of public-facing institutions and companies, such as churches, restaurants, and cafes, decided to drop cash, as it was seen as a potential source of infection.

At the same time, business owners in several customer-facing industries have realised the benefits of streamlining their operations through the introduction of cashless services, among which the fact that employees don’t have to deal with cash at the register is among the top advantages.

With less and less businesses willing to take cash, many have opted against carrying it as they are unsure when and where they will be able to spend it. 

Will the change stick?

Last year, the average value of cash in circulation was 39.4 billion kroner, according to Norway’s Central Bank (Norges Bank). That is 27 million kroner more than in 2021, and the first time in several years that the value of cash in circulation in Norway has not decreased.

However, there is little doubt in the mind of many experts that the adoption of cashless payments is the future.

“Paying with cards is very efficient in Norway, and we have one of the most efficient clearing systems in the world with minor charges to shops being added,” Tor W. Andreassen, an NHH – Norwegian School of Economics professor in service innovation, told The Local.

“With more shops offering card payment, more customers will use the terminals by just swiping or tapping their card. With this, less money is required to be kept in the wallet. With smartphones, we made a quantum leap forward in the same direction. Finally, Norwegians being among the most tech-savvy people make adopting the technology easier,” Andreassen explained.

However, he also pointed out that this transition has benefits and downsides.

“The key benefits have to do with transparency and the ability to electronically track transactions, thus reducing the ‘black’ economy. The main downside, in my mind, is the pedagogical element of holding physical money and saving it, the feeling of money accumulating as you save. Parents used to take their kids to the bank and count and deposit the money. This connected kids to sacrificing something today for the benefit of tomorrow. Smart parents would point to the effect of compound interest over time,” the professor noted.

Required to accept cash

Still, despite the trend of cash losing popularity among Norwegians, the country’s financial regulations still require businesses to accept cash.

Not only that, but the Norwegian Consumer Protection Authority can also issue fines to companies that refuse to accept cash.

There is also an ongoing debate about how some of the country’s elderly, who perhaps don’t have the digital skills to switch over to cashless payments, would adapt to the shift.

The Pensioners’ Association pointed out on several occasions that it receives complaints from some of its members, and the association is concerned about the developments.

Furthermore, Norges Bank points out that cash shouldn’t be dropped completely – as it is a necessary fallback in emergencies.

This is an issue that the Norwegian government is aware of, and last year it proposed a bill to solidify consumers’ rights to pay with cash.