Monday, January 11, 2016

Cashless Sweden

I have found that, over my years in Sweden, every place I go accepts debit cards. I've paid for hot dogs at a kiosk, and my taxi boat through a wireless dongle while on the high seas. I've sent money electronically all over Sweden for all sorts of business and personal reasons.

The New York Times has written recently about Sweden's progress in becoming a cashless society. Old-fashioned physical money represents just 2% of Sweden’s economy, compared with 7.7% in the United States. The Guardian has a similar article, pointing out that robberies have fallen in line with the lack of money available to steal.

Although I haven't seen it yet myself, apparently many ATM machines have been removed due to lack of use, and some bank branches no longer keep cash. It's not just credit cards, too. Camille uses an iPhone app called 'swish' to send and receive small amounts quickly and easily.

It's not just the citizenry that endorses going cashless. Skatteverket, the Swedish tax authority, loves eliminating cash transactions. The high tax rates in Sweden give ample incentive to tax dodge when possible. Paying a workman in cash in an undocumented transaction avoids the payment of VAT, which can be as high as 25%. Of course, Skatteverket does a great job of chasing down such activity.

Despite such work, the shadow economy in Europe is still huge, nearly a half-trillion euros last year. In Bulgaria, 31% of the country's economic activity is off the books. In Sweden it's still over 13%.

As more transactions take place online, more taxes can be collected, which is something the Swedish authorities love!

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