It turns out that there is more to Sweden than fjords, Volvo and smorgasbord. By 2030, Sweden could become the first country in the world to become a truly cashless society. Today, 80% of all transactions in Sweden are done electronically, or by debit card.
Bengt Nilervall at the Swedish Federation of Trade, or Svensk Handel says that Sweden and the rest of Scandinavia lead the world in terms of cashless trading. Swedes on average perform an average of 260 transactions each year using their debit and credit cards. This is in sharp contrast to countries such as Italy where cash is still preference numero uno. Italians use cash for three-quarters of transactions.
“That is due to the low confidence in the authorities and the banking system,” said Niklas Arvidsson, an associate professor of industrial dynamics. Retailers, banks and card companies welcomed the trend with the proviso that customers can keep up with developments.
Advantages of going cashless
The most obvious advantage is the enhanced security for both bank staff and customers. Sweden spends around US$ 1.2 billion each year in securing cash. This amounts to 0.3% of the kingdom’s GDP. In 2012, only five bank robberies were committed in Sweden – a thirty year low.
Going cashless has also spawned a multitude of other services that enable people transfer small sums of money without having to resort to the ATM. It is also possible to shop for groceries in Sweden using different forms of electronic payment.
Sweden and Bitcoin
Sweden has had a fairly bumpy relationship with Bitcoin and other virtual currencies. In April 2013, Swedish central bank, the Riksbank issued a warning to its citizens on the use of Bitcoin. In June of the same year, the country’s highest court, the Supreme Administrative Court (Högsta förvaltningdomstolen) filed a petition with the European Court of Justice asking for clarity on how EU members ought to treat Bitcoin.
Swedish national David Hedqvist and proprietor of Bitcoin.se is locked in a case with Sweden’s tax agency. The tax agency known as the Skattverket is challenging an earlier ruling handed down by a Swedish court that held that VAT should not be charged on Bitcoin trades.
Some jurisdictions such as the UK have chosen to zero-rate Bitcoin while others such as Poland and Estonia and have swung to the opposite side, subjecting Bitcoin exchanges to full taxation. Early in 2014, the Swedish Tax Agency was said to be drafting rules that would treat Bitcoin as an asset rather than as a currency. The implications were that Sweden would subject Bitcoin to capital gains tax, which stands at a flat 30% rate.
Cashless Sweden and Bitcoin
If Sweden could resolve its legislative and administrative hurdles with Bitcoin, it could emerge as the de facto Bitcoin leader in Scandinavia. Already, one Swedish politician Mathias Sundin, financed his parliamentary campaign exclusively in Bitcoin.
In addition, two Bitcoin companies, KnCMiner and Safello call Sweden home. Current EU rules which date to 1993 do not make provision for Bitcoin. There is, therefore, an urgent need for clarity in the Eurozone on how to treat Bitcoin and the general cryptocurrency landscape. Are you a participant in Sweden’s crypto-currency community? Do share your thoughts on this article.
Images from Wikimedia Commons and Shutterstock.