London: Sweden is on track to becoming the world's first cashless society, thanks to the country's embrace of information techology as well as a crackdown on organised crime and terror, according to a new study.

Niklas Arvidsson, a researcher at KTH Royal Institute of Technology in Sweden, said that the widespread and growing embrace of the mobile payment system, Swish, is helping hasten the day when Sweden replaces cash altogether.

"Cash is still an important means of payment in many countries' markets, but that no longer applies here in Sweden. Our use of cash is small, and it's decreasing rapidly," Arvidsson said. In a country where bank cards are routinely used for even the smallest purchases, there are less than 80 billion Swedish crowns in circulation, a sharp decline from just six years ago, when 106 billion Swedish crowns were in circulation.

"And out of that amount, only somewhere between 40 and 60 per cent is actually in regular circulation," he said. The rest is socked away in people's homes and bank deposit boxes, or can be found circulating in the underground economy.

The result of collaboration between major Swedish and Danish banks, Swish is a direct payment app that is used for transactions between individuals, in real time.

The service's direct

collaboration with Bankgiro and Sweden's national bank, Riksbanken, is a critical factor in its success, researchers said.

But if Swish starts to be used on a larger scale and grow to include retail transactions and e-commerce, Arvidsson said it is likely the country's entire payment system infrastructure will have to be revamped.

Arvidsson said Swish is already revolutionising the banking system. With digital giro systems, early electronic payment services and other advances in online financial services, Swedish banks have been early adopters of advanced IT systems, he said.

Besides simplicity and lower costs, digital payments also add transparency to the nation's payment system. Several banks in Sweden already have 100 per cent digitalised branches that will simply not accept cash.

"At the offices which do handle banknotes and coins, the customer must explain where the cash comes from, according to the regulations aimed at money laundering and terrorist financing," he said.

In spite of its popularity, Sweden will still have to ensure that all people are able to participate in the new payment system, Arvidsson said.

The transformation would present serious challenges for those who are unfamiliar with computers and mobile phones - mainly older people living in rural areas.

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