Contrary to expectations, a German neighboring country is now returning to cash. The vision of a cashless future may have to wait a while longer.
Sweden, once considered the most progressive country in terms of digital payments and a model for Europe, is now taking a step back towards cash. This shift comes as a surprise, given that about half of all payments in Germany are now digital, with smartphone payments gaining popularity for their convenience and speed.
The reason for Sweden’s return to cash is rooted in security concerns, particularly highlighted by Russia’s attack on Ukraine. This event demonstrated the vulnerability of digital systems to cyberattacks, potentially rendering electronic payment methods useless in crisis situations.
To re-establish cash usage, the Swedish government is distributing flyers and brochures to households, aiming to increase acceptance of coins and banknotes among the population. This move reflects a growing awareness of the importance of maintaining cash as a resilient payment option.
While digital payments continue to grow in Germany, with the market projected to reach $852.1 billion by 2029, Sweden’s decision serves as a reminder of the ongoing importance of cash in ensuring financial system resilience and inclusivity. In Germany, cash still accounted for 51% of transactions in 2023, indicating a slower transition to digital payments compared to Sweden’s previous rapid adoption.
This development aligns with the Deutsche Bundesbank’s view on the importance of preserving cash access and acceptance, as outlined in their recent foresight study. It suggests that the future of payments may involve a balanced approach, maintaining cash alongside digital options to ensure system resilience and consumer choice.
