How Sweden is leading the way to the payments of the future

In the big cities, cash has almost completely disappeared as a means of payment in everyday life, and Swish, contactless cards and e-commerce have become the norm. In addition, public transport companies, shops and restaurants are increasingly refusing to accept cash.

However, as the use of cash decreases, questions are being raised about the risks associated with the digital payment system. Are Swedes becoming too dependent on card networks? What happens in the event of a digital breakdown? How can we ensure robust offline payment solutions?

The efficiency of the digital payment system is undeniable. However, Sweden lacks a long-term strategy for future payments. Digital systems are effective, but what happens when they are disrupted or knocked out? We rely on a few players, mainly US Visa and Mastercard’s card networks, which creates both a technical and geopolitical concentration risk. Swish is an option, but it depends on a financial infrastructure that requires you to have a bank account, a phone and an internet connection. Today, there are no alternatives to cash for offline payments.

At the same time, the global use of cryptocurrencies is increasing at a rapid pace. There are currently dollar-pegged “stablecoins” (private digital tokens such as USDT or USDC) worth $200 billion, which are used to exchange other cryptocurrencies as well as to make cross-border payments and remittances. This parallel digital dollar system is backed by the US government and is playing an increasingly important role in global financial transactions, leading the EU to warn that the US government’s crypto strategy could affect financial stability in Europe.

The trend is also noticeable in Sweden. Between 5 and 7 percent of Swedes already use digital wallets for cryptocurrencies and some restaurants, for example, have started accepting crypto payments. The Riksbank has been evaluating the e-krona, a central bank-issued digital currency, for several years, but the project still lacks a clear vision of the need it is expected to meet. As the playing field and technical possibilities change at an ever-increasing rate, determination and innovation are required. To fall behind on developing future payments would be to miss an opportunity and, in the worst case, introduce other risks later on.

Sweden has a unique chance to lead the way towards the digital payments of the future when cash use decreases. But it requires political will, strategic foresight and a determination to ensure that payments in the Swedish currency remain both stable and accessible – while opening the door to innovative private alternatives and decentralised financial systems.

We therefore call on the government to develop a long-term payment strategy for the Swedish krona and at the same time create the conditions for a second parallel payment system. We propose the following measures:

1. Develop a national strategy for future payments

Given developments in the rest of the world, a number of strategic decisions need to be made about future payments to ensure financial stability in Sweden over time.

2. Consider new parallel payment systems

Swish is a successful example of a payment system but Sweden should explore more options to reduce dependence on foreign-owned card networks.

3. Open up to alternatives to the e-krona

Instead of focusing solely on the e-krona, the possibilities of open and decentralised payment protocols should be explored for both online and offline payments.

4. Work with the EU to future-proof the Swedish krona

Sweden should take a more active role in the development of a European strategy for digital currencies, which includes cryptocurrencies and decentralised financial systems that are also outside the euro area.

Read the article in Swedish.