Top six cashless society countries: Finland, Sweden and China lead the way

The decade ahead is one anticipated to be swept with technological disruption, as we are digitising every aspect of our day-to-day lives. The way we pay for things makes no exception. GlobalData, a leading data and analytics company has forecast which countries will most likely be the leaders in moving towards a truly cashless society.

Cashless societies on the rise

Vlad Totia, Payments Analyst at GlobalData, explains: “E-commerce accounted for $3.5 trillion of worldwide sales in 2019. While smartphones are becoming ubiquitous even in the most underdeveloped countries. Banks are slowly closing down their brick-and-mortar branches in favor of going fully digital, and people in general are tired of waiting for days on end for international transactions to execute.

“All of these developments point towards one question: what is the point of cash anymore? While it can still have its uses, especially between banks, physical money costs a lot to store, transfer and produce. Most coins produced are less valuable than the material used to make them.”

As the world is moving towards this exciting future, cashless societies, GlobalData predicts which countries have the potential to be the cashless leaders of the decade ahead.

Finland

“Finland is, as of right now, the country most ready for the impending transition to a cashless society. It ranks second to Ireland in terms of frequency of use of cards, fifth in e-commerce spending as a percentage of gross domestic product (GDP), third in internet banking penetration and second in smartphone penetration for the 2022 forecast.

Card payment transaction value in Finland, according to GlobalData

 

“As a country with a population of only 5.5 million, cash in Finland is increasingly irrelevant in both rural and urban areas. Although it is not taking as aggressive measures as Sweden in moving towards a fully digital economy, Finland does seem to be more cashless-ready at the moment.”

Sweden

According to GlobalData, if there is any country with the potential to jump to first place within a couple of years and become a truly cashless society, it is Sweden. About 80 per cent of Swedes use a card to pay for purchases. Digital payments via card or apps are so widely accepted that many Swedes no longer carry cash. Even children pay with debit cards. Bengt Nilervall ot the Swedish Trade Federation explains why:

‘In terms of the cashless society, I think Sweden is ahead compared with other countries because in Sweden there is – in general – a trust in the government, the system, the banks and the authorities.’

Payment patterns in Sweden

 

Over the last few years, thousands of Swedes have had a biometric microchip implanted into their hands so they do not have to carry keycards, IDs or even train tickets…

China

In global terms, China is behind Sweden, which aims to go completely cashless as early as 2023. However, the growth in non-cash payments in China is much more significant, given its population size.

“One area where it has seen extreme developments is the rapid adoption of mobile payments. One of the most popular ways to pay by phone is QR code scanning. This method has been successfully adopted by mainstream society. One proof that China is rapidly moving towards a cashless society is its undisputed leading position in e-commerce. As of 2019, China recorded an estimated 80 billion cash transactions.”

Cashless payment at a street vendor in China

 

China is already the world’s largest mobile payment market and is also a leader in peer-to-peer payments, in which people are able to pay each other by text.

South Korea

South Koreans are increasingly going cashless as more people rely on credit cards and digital payment tools. (According to a survey by the Bank of Korea (BOK). “Even more so than China, South Korea is arguably the cashless champion of Asia. Although the Chinese adoption of cashless alternatives is much faster, South Korea already has most of the infrastructure in place nationwide. With roughly 6% of the country’s GDP being e-commerce spending and more than 100 transactions on average per card every year, South Korea is well on its way to remaining a top-three cashless country by 2022.

“More than half of the country’s 1,600 bank branches no longer accept cash deposits or withdrawals and a significant number of government institutions have gone fully cashless.”

United Kingdom

“The UK, and specifically London, has really geared up its tech scene, and the digitization of money has not been left behind. Arguably the global capital for online banking, the UK is leading the charge in many fintech innovation areas. Mobile payments are not something new in the country, with more and more small merchants accepting card and mobile payments.

“The UK ranks number two globally for e-commerce as a percentage of GDP, being second only to China. The British have become very comfortable with taking out their phone or card to pay for even the most mundane daily purchases. At this rate, the UK should transition at the very least to a predominantly cashless society by the mid-2020s.”

Australia

“Australia sits in seventh place in terms of cashless society readiness and it is seriously gearing up to digitize most of its economy. By 2022, the vast majority of the population should have at least one smartphone. Internet banking penetration is forecast to reach almost 70% of Australians. Australian Payments Network chief executive officer Dr Leila Fourie said we have seen a rapid increase in the last five years in digital non-cash transaction mechanisms. “The use of debit cards has increased 87 per cent over the last five years and online banking transactions have increased 43 per cent. Whereas ATM and cheque usage have decreased 25 and 60 per cent respectively,” Dr Fourie said.

Payment in Australia