Sweden and Norway are both reconsidering their plans for cashless societies. As digital payment systems gain popularity, Sweden and Norway are reassessing their rapid shift toward cashless societies. Initially propelled by high digital literacy and fintech innovation, these nations now face new challenges from geopolitical tensions and cybersecurity threats. With ongoing concerns about the security of fully digital transactions, both governments are advocating for a balanced approach that includes cash as a vital payment method.
Both nations fear that fully digital payment systems would leave them vulnerable to Russian security threats, and concern for those unable to use them.
Previously they were rapidly moving rapidly cashless systems, supported by high digital literacy and fintech growth.
A combination of good high-speed internet coverage, high digital literacy rates, large rural populations and fast-growing fintech industries, had put both country’s on a fast track to a future without cash.
In 2018, the former deputy governor of Sweden’s central bank had even predicted that Sweden would probably be cashless by 2025.
The Guardian reports: But Russia’s invasion of Ukraine in 2022 and a subsequent rise in cross-border hybrid warfare and cyber-attacks blamed on pro-Russia groups have prompted a rethink.
The Swedish government has since completely overhauled its defence and preparedness strategy, joining Nato, starting a new form of national service and reactivating its psychological defence agency to combat disinformation from Russia and other adversaries. Norway has tightened controls on its previously porous border with Russia.
The security rethink extends to the fundamentals of how people pay for goods and services.
In a brochure with the title If Crisis or War Comes that will be sent to every home in Sweden next month, the defence ministry advises people to use cash regularly and keep at least a week’s supply in various denominations as well as access to other forms of payment such as bank cards and digital payment services. “If you can pay in several different ways, you strengthen your preparedness,” it says.
The government is also considering legislation to protect the ability to pay in cash for certain goods. Cash is legal tender in Sweden, but shops and restaurants can effectively make themselves cashless as long as they display a notice setting out their restrictions on payment methods.
Norwegian retail customers have always had the right to pay in cash, but it has not been enforced and in recent years increasing numbers of retailers have gone cashless, locking out about 600,000 people who do not have access to digital services. The government acted over the summer, bringing in legislation under which retailers can be fined or sanctioned if they do not accept cash payments from 1 October.
The justice and public security ministry said it “recommends everyone keep some cash on hand due to the vulnerabilities of digital payment solutions to cyber-attacks”. It said the government took preparedness seriously “given the increasing global instability with war, digital threats, and climate change. As a result, they’ve ensured that the right to pay with cash is strengthened”.
The country’s justice and emergencies minister, Emilie Enger Mehl, said earlier this year: “If no one pays with cash and no one accepts cash, cash will no longer be a real emergency solution once the crisis is upon us.” Prolonged power cuts, system failures or digital attacks on payment systems and banks could leave cash as “the only alternative that is easily available”, she said.
Both Sweden and Norway were leaders in adopting cashless payment systems, driven by strong internet infrastructure and a tech-savvy population. However, recent geopolitical events, particularly Russia's invasion of Ukraine, have sparked significant reconsideration. Both countries are enhancing their defense strategies, which now encompass financial security. Sweden's upcoming brochure, "If Crisis or War Comes," emphasizes the need for citizens to maintain cash on hand and diversify payment methods to ensure preparedness against potential crises. Norway has also implemented legislation to enforce cash acceptance by retailers, recognizing that a cashless society can marginalize those without access to digital payment options. This shift highlights a growing awareness of vulnerabilities in digital systems amidst rising global instability.