Which countries are likely to go cashless first?


barista offers card machine to woman paying with her phone

The use of cash in the UK has slowly dwindled over the last decade, as many people started to favour plastic over notes and coins. This decline has only been accelerated by the onset of the Covid-19 pandemic, as many shops and services encouraged card payments to avoid the spread of the virus.

In fact, figures from the Guardian show that cash payments fell by 35% in 2020, with 13.7 million UK citizens now living a cashless life. This trend is not unique, as a similar phasing out of cash from society is happening across the world.

But which countries are leading the race towards a cashless society, and is the UK a likely contender? Read on to find out more.

The transition to a cashless society in the UK picked up steam in the 1990s

While there were some initial moves towards a digital substitute for cash in the 1980s, online payment methods only really gained momentum in the 1990s.

During this time, the internet and rudimentary forms of online banking started to become more common. Online payment platforms and banking portals helped drive the early stages of the revolution, such as PayPal which was founded in 1998.

As more of the population started to use credit and debit cards in the early 2000s, online banking became more widely adopted. Figures from Statista show a sharp rise in the use of online banking over the last 15 years, with 76% of UK residents using it regularly in 2020, compared to just 30% in 2007.

In the early-to-mid-2010s, digital wallets like Google Pay and Apple Pay made it possible to pay from your phone, without the need for a physical card.

But Covid-19 may prove to be the most significant event in the move away from cash. Cash payments were suddenly more impractical than ever before, with many businesses refusing to accept cash at all to minimise the risk of spreading the infection.

An increase in online shopping has also accelerated the move from cash. Plus, in October 2021, the contactless limit in the UK was raised to £100, meaning that it became more convenient than ever to simply tap your card and go.

Every country is at a different stage in the transition to cashless

Every country has a different level of reliance on cash. While cash is still the preferred choice when making a payment in many places, in countries like Finland, Sweden, and Norway cash is on the brink of extinction.

Norges Bank, the Norwegian central bank, revealed that cash payments accounted for just 4% of transactions across Norway through 2020 up to November. Plus, three-quarters of all card payments were contactless, either by card or paid through a digital wallet.

Another factor accelerating the cashless transition in Nordic countries is the widely adopted mobile app called BankID, based in Sweden. This app allows its users to access their bank accounts, make payments, access digital public services, and even sign official documents all from a single application.

According to German online bank N26, Sweden could be fully cashless as soon as 2023, and Finland expects to follow suit by 2029.

Many people are cautious of potential problems with a cashless society

Whether or not a country is close to being cashless or not, many seem to be wary of the transition to digital only payments. While cashless payments can be convenient in terms of speed and organisation, several parts of society still tend to rely on cash.

For one, older people are the largest users of cash in most European countries. In fact, Age UK report findings from the Financial Lives 2020 survey which claim that 2.4 million people aged over 65 primarily use cash in their day-to-day lives.

Many elderly citizens do not own mobile phones so cannot access digital wallets, and some do not even use the internet, preventing them from online banking altogether.

According to UK Finance, about one-third of UK adults had registered for mobile payment methods like Apple Pay by 2020. However, this figure accounts for only 11% of those aged over 65.

Fully transitioning to a cashless society could be difficult for those who do not use or have access to replacement payment methods. Because of this face, even the country’s leading the way have been met with resistance.

As a result, it’s difficult to know who’s winning the race towards a cashless society. Despite Nordic countries taking a commanding early lead, they still need to navigate the issue of leaving some in society behind.