The global shift toward a cashless society is gaining momentum, with countries worldwide embracing digital payments at unprecedented rates. As technological advancements and changing consumer habits reshape how we handle money, cash becomes less relevant in everyday transactions.

A variety of innovative solutions, from mobile payment apps to contactless cards and government-backed digital currencies, are leading the charge. But which countries are leading the race? And why does going cashless matter?

In this blog, we’ll explore what a cashless society means, the global trends pushing nations to rethink how they approach payments and take a closer look at the countries at the forefront of this revolution.

What is a cashless society and why does it matter?

A cashless society is exactly what it sounds like, one where cash has become obsolete. Instead of coins and bills changing hands, money moves digitally and seamlessly through mobile devices, bank apps, or contactless payment systems.

With easier currency exchange through digital systems, cross-border payments become a breeze, and customers and businesses gain a level of convenience that cash simply can’t provide.

Of course, speed is a driving factor, but security remains a top concern for consumers. For example, Sweden’s rapid adoption of a cashless system has led to some unexpected challenges, with rising concerns over crime linked to the nation’s cashless status. 

However, the move to digital payments is inevitable. As our economies become more digitized and people increasingly prefer to handle their finances through mobile devices, the trend toward cashlessness will only accelerate.

According to the World Economic Forum, this transition will bring about smoother, more cost-effective transactions in developed countries. It could be a game-changer in developing nations, delivering life-changing socio-economic benefits and closing gaps between people, no matter where they live.

Global trends toward going cashless.

The global shift toward cashless transactions has been gathering momentum, and Europe is at the forefront of this movement. A key factor in this transformation is the revised Payment Services Directive (PSD2), which has revolutionized payment processing across the European Union.
Introduced to update the initial PSD in 2007, PSD2 has created an open banking framework that fosters innovation, enabling seamless digital payments and opening the door for new players in the market.

Non-cash transactions are expected to hit $1.3 trillion this year, with projections showing a 15% annual increase, reaching $2.3 trillion by 2027.

The payment landscape is rapidly changing as consumer habits evolve, shaped by technological advances and a growing preference for secure, convenient options.

Recent reports highlight that online payment methods are shifting, with Pay by Bank gaining popularity due to its increased security and ease of use.

Open banking is at the heart of this change, a system that allows third-party providers to access financial information securely and provide consumers with better payment solutions.

The pandemic accelerated demand for touchless payments, further fueling the cashless trend. With PSD2 and global digital transformation, secure and fast digital payments are becoming the norm, as countries find their own paths toward a cashless future.

Countries leading the cashless race.

Across the globe, several countries are accelerating toward a cashless future. Each nation has its own unique path and pace, but these top contenders are pushing the boundaries of digital payments and leaving cash behind.

• United Kingdom: As a fintech leader second only to the USA, the UK has made significant strides toward a cashless society. Since 2020, cash use at points of sale has dropped by 35% due to changing consumer habits during the pandemic. While the UK ranks sixth globally in digital transactions, it remains a strong innovator in European fintech.
• Finland: Finland is swiftly moving toward a cashless future, ranking second in Europe for card use and third in online banking adoption. With impressive ecommerce spending, it is predicted to become fully cashless by 2030, showcasing a strong commitment to digital payments.
• The Netherlands: In the Netherlands, 91% of the population uses digital payments and debit cards. While there is some cultural resistance to credit, the Dutch lead Europe in cashless smartwatch payments. Although carrying cash is becoming rare, this hesitation may slow the transition to a fully cashless society.
• Norway: Norway is a strong contender in the cashless race, with 98% of its citizens using debit or credit cards. By 2021, only 2-3% of point-of-sale transactions were cash-based, with three-quarters of card transactions being contactless. Over 95% of Norwegians use mobile payment apps, highlighting their preference for digital transactions.
• China: China is making impressive progress toward a cashless society. In 2020, it launched a pilot program for the digital yuan, processing $13.68 billion in payments by early 2022. While some demographics still use cash, China is expected to go entirely cashless within two to three years.
• Poland: Polish consumers led the shift to contactless payments during the pandemic, with 70% of respondents reporting they had gone cashless since early 2020. In 2023, their share of cash transactions amounted to 42.7%, a 1.4% decrease from 2022.
• Sweden: Sweden leads the world in cashlessness, transitioning away from banknotes. With just 32 ATMs per 100,000 people and over 98% of Swedes owning a debit or credit card, cash usage is dwindling. Sweden ranks high in mobile and contactless payments, and some reports suggest physical cash could vanish from its economy as early as 2024. While each country measures cashlessness differently, Sweden is regarded as the closest to achieving a fully cashless society.

Sweden: Leading the way in cashless innovation.

Sweden is at the forefront of the cashless movement, driven by a cultural openness to innovation, high trust in digital infrastructure, and widespread banking access. Its early adoption of digital payments, exemplified by the mobile app Swish, launched in 2012 for real-time money transfers using just phone numbers, has made cash increasingly obsolete. 

Another example is the use of digital ids. Sweden issued its first digital identity in 2003, a milestone that feels like a different era in digital evolution.  Today, BankID stands as the nation’s leading electronic identification system, with an impressive 98% adoption rate among Swedes.

A key factor in this transition is the current development of the e-krona, a central bank digital currency (CBDC) being investigated to provide a secure state-backed alternative as cash usage declines. This ensures financial inclusivity and stability in a cashless world.

Between 2007 and 2015, cash in circulation dropped by nearly 15%, and cash payments in shops halved from 39% to 20%. By 2015, 95% of Swedes had debit or credit cards, making an average of 290 transactions yearly, well above the EU average of 104.

Cash accounts for less than 15% of all transactions, representing only 1% of GDP.

Many Swedish banks no longer handle cash, and retailers can refuse cash payments with a simple sign. With fewer large banks, collaboration on payment solutions is easier, and Swedes’ trust in payment service providers smooths the transition to cashlessness.

Sweden’s embrace of digital solutions is paving the way for a future where cash is no longer king.

Final thoughts.

As we explore the evolving landscape of cashless societies, numerous countries are clearly adopting innovative strategies to transition toward digital payments. Sweden is emerging as a leader in this movement.

With its robust technological infrastructure, the widespread use of real-time payment systems, and popular mobile apps like Swish, Sweden is effectively paving the way for a fully cashless future.

Strong European regulatory support further enhances the nation’s commitment to embracing digital transactions, which ensure both security and convenience for consumers.

As more countries follow in Sweden’s footsteps, partnerships with forward-thinking payment solution providers like Zimpler will be crucial in facilitating this shift. We are at the forefront of the digital payment revolution, offering seamless, user-friendly open banking solutions that empower businesses and consumers to embrace the cashless lifestyle.

Together, we’re moving toward a future where transactions are faster and smarter, creating a world where cash may soon become a relic of the past.

Join the payment revolution.

The information contained in this post is intended for informational purposes only, and should not be relied upon for professional advice of any kind. Zimpler does not make any representation or warranty as to the completeness or accuracy of the information, and assumes no liability or responsibility that may result from reliance on such information.