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By MALIN RISING | Associated Press Sat, Mar 17, 2012
STOCKHOLM (AP) Sweden was the first European country to introduce bank notes
in 1661. Now it's come farther than most on the path toward getting rid of
them.
"I can't see why we should be printing bank notes at all anymore," says Bjoern
Ulvaeus, former member of 1970's pop group ABBA, and a vocal proponent for a
world without cash.
The contours of such a society are starting to take shape in this high-tech
nation, frustrating those who prefer coins and bills over digital money.
In most Swedish cities, public buses don't accept cash; tickets are prepaid or
purchased with a cell phone text message. A small but growing number of
businesses only take cards, and some bank offices which make money on
electronic transactions have stopped handling cash altogether.
"There are towns where it isn't at all possible anymore to enter a bank and use
cash," complains Curt Persson, chairman of Sweden's National Pensioners'
Organization.
He says that's a problem for elderly people in rural areas who don't have
credit cards or don't know how to use them to withdraw cash.
The decline of cash is noticeable even in houses of worship, like the Carl
Gustaf Church in Karlshamn, southern Sweden, where Vicar Johan Tyrberg recently
installed a card reader to make it easier for worshippers to make offerings.
"People came up to me several times and said they didn't have cash but would
still like to donate money," Tyrberg says.
Bills and coins represent only 3 percent of Sweden's economy, compared to an
average of 9 percent in the eurozone and 7 percent in the U.S., according to
the Bank for International Settlements, an umbrella organization for the
world's central banks.
Three percent is still too much if you ask Ulvaeus. A cashless society may seem
like an odd cause for someone who made a fortune on "Money, Money, Money" and
other ABBA hits, but for Ulvaeus it's a matter of security.
After his son was robbed for the third time he started advocating a faster
transition to a fully digital economy, if only to make life harder for thieves.
"If there were no cash, what would they do?" says Ulvaeus, 66.
The Swedish Bankers' Association says the shrinkage of the cash economy is
already making an impact in crime statistics.
The number of bank robberies in Sweden plunged from 110 in 2008 to 16 in 2011
the lowest level since it started keeping records 30 years ago. It says
robberies of security transports are also down.
"Less cash in circulation makes things safer, both for the staff that handle
cash, but also of course for the public," says Par Karlsson, a security expert
at the organization.
The prevalence of electronic transactions and the digital trail they generate
also helps explain why Sweden has less of a problem with graft than countries
with a stronger cash culture, such as Italy or Greece, says economics professor
Friedrich Schneider of the Johannes Kepler University in Austria.
"If people use more cards, they are less involved in shadow economy
activities," says Schneider, an expert on underground economies.
In Italy where cash has been a common means of avoiding value-added tax and
hiding profits from the taxman Prime Minister Mario Monti in December put
forward measures to limit cash transactions to payments under 1,000 ($1,300),
down from 2,500 before.
The flip side is the risk of cybercrimes. According to the Swedish National
Council for Crime Prevention the number of computerized fraud cases, including
skimming, surged to nearly 20,000 in 2011 from 3,304 in 2000.
Oscar Swartz, the founder of Sweden's first Internet provider, Banhof, says a
digital economy also raises privacy issues because of the electronic trail of
transactions. He supports the idea of phasing out cash, but says other
anonymous payment methods need to be introduced instead.
"One should be able to send money and donate money to different organizations
without being traced every time," he says.
It's no surprise that Sweden and other Nordic countries are at the forefront of
this development, given their emphasis on technology and innovation.
For the second year in a row, Sweden ranked first in the Global Information
Technology Report released at the World Economic Forum in January. The
Economist Intelligence Unit also put Sweden top of its latest digital economy
rankings, in 2010. Both rankings measure how far countries have come in
integrating information and communication technologies in their economies.
Internet startups in Sweden and elsewhere are now hard at work developing
payment and banking services for smartphones.
Swedish company iZettel has developed a device for small traders, similar to
Square in the U.S., that plugs into the back of an iPhone to make it work like
a credit card terminal. Sweden's biggest banks are expected to launch a joint
service later this year that allows customers to transfer money between each
other's accounts in real-time with their cell phones.
Most experts don't expect cash to disappear anytime soon, but that its
proportion of the economy will continue to decline as such payment options
become available. Before retiring as deputy governor of Sweden's central bank,
Lars Nyberg said last year that cash will survive "like the crocodile, even
though it may be forced to see its habitat gradually cut back."
Andrea Wramfelt, whose bowling alley in the southern city of Landskrona stopped
accepting cash in 2010, makes a bolder prediction: She believes coins and notes
will cease to exist in Sweden within 20 years.
"Personally I think this is what people should expect in the future," she says.
But there are pockets of resistance. Hanna Celik, whose family owns a newspaper
kiosk in a Stockholm shopping mall, says the digital economy is all about banks
seeking bigger earnings.
Celik says he gets charged about 5 Swedish kronor ($0.80) for every credit card
transaction, and a law passed by the Swedish Parliament prevents him from
passing on that charge to consumers.
"That stinks," he says. "For them (the banks), this is a very good way to earn
a lot of money, that's what it's all about. They make huge profits."