As part of a discussion on the Digital By 2020 project portal for North Devon Homes residents with both Ali, the Income Manager and Marc, Director of Neighbourhoods at NDH and the potential finance issues with future methods of transacting by residents to pay their rents I started to think about what new developments were around currently in the field of cashless payments.
Marc shared the fact that many of their residents still want to come into the office today and pay cash for their rent and how they at NDH need to think of ways they will need to encourage them to go fully digital and cashless as part of the Digital by 2020 project.
We discussed ideas on promoting the digital project when it approaches roll out with devices to take round once the portal is running and going to the NDH housing stock areas visiting residents to show them how it will work and how they can use it to benefit them.
From these discussions I also started to look at the cashless society in general and came across Sweden as a pioneer in this area. As an aside a NDH resident wanted to learn some Swedish online as considering a move there and on so we looked at some aspects of Swedish life there and so the financial element was part of our sessions together too.
Sweden was the first bank to adopt paper bank notes as currency in 1661.
362 years later and now most purchases have been paid electronically, by debit/credit card using chip and Pin (much like other countries including the UK using contactless technology), or using the mobile application called Swish especially designed to induce and aid Swedes to embrace a cashless life.
This means, that in 2019 more than 80 percent of all retail transactions have been transacted electronically. This is a similar figure to the rest of the other Nordic countries including Finland, Norway, Denmark, and Iceland. Northern European countries have adopted contactless payments, but Southern European countries have been much slower to adopt the technology with many still preferring cash.
In 2012, the major Swedish banks got together to build a mobile payment platform to make electronic payments both easier and universal. The application, which came to be called Swish, was developed as a collaboration between them and was adopted quickly and now used by over 50% of the population in Sweden. It looks like this will become the dominant way of paying for goods and services in the country.
Advantages for the state are in the transport of money itself which becomes more secure. Shop owners and businesses feel safer having much less cash on their premises and this has also reduced bank or post office robberies. Such robberies have noticeably decreased in the past years; since there is little actual cash in most banks in Sweden anymore it’s lean pickings for the thieves. It also is a way of combatting the underground drug, counterfeiting, and racketeering and weapons markets. Signs are more frequently appearing in Sweden in stores that say “No Cash Payment in this Store.” Street vendors do not take cash either now and street market stalls are also primarily cash free.
Sweden has the lowest rate of ATM withdrawals as a percentage of GDP in the world, at a measly 2.5 percent. In addition, Sweden’s Central Bank the Riksbank, is testing its own digital currency called the e-Krona, which could speed up the cashless society process.
The e-Krona pilot scheme starts in 2019. The Swedish digital currency will be implemented throughout the country in 2021. This all points towards Sweden achieving their goal of becoming fully cashless in 2023.
The double-edged sword of this move to cashless is that as cash crime reduces so internet crime by fraud and scams rises.
Bringing it back to the UK as part of looking into this and how Sweden is educating their children to live without cash the children there get their own parental approved debit card at aged 7 to aid their understanding of how such systems work. In the UK there are a few pocket money apps which do a similar job and one of the best I came across is by GoHenry, which Ali told me about as part of our discussions on money matters.
In partnership with Visa, Go Henry is a debit card for 6 to 18-year olds with parental controls. Membership costs are free for the first month then £2.99 per month. Go Henry state that they don’t make money from interest or debt. Their costs to run and develop app are through the membership fee. Parents can load money onto the child’s account in same way they handle their own online bank accounts.
Ali, with her role as the Income Manager at NDH it would be safe to say is quite astute with money. Her daughter has her own personalised card with a design of her choice on which she can transfer money to her as pocket money.
Ali can monitor her daughter’s spending; how much and where and then also set her tasks to earn extra money like wash the dishes or make your bed for say 50p. If she doesn’t do a task or doesn’t behave then Ali can debit the account with a financial penalty! She can also set savings goals too.
On a more positive note, the child can even decide to give money to charities they choose as well.
It’s not the comprehensive system Sweden is now engaged in introducing which we may need in the UK to go fully cashless, but I found it to be a useful tool for parents to teach fiscal responsibility and how money works.
It’s possible that if future generations grow up with these apps in school and at home (although it would be more desirable if this went hand in hand with some money matters type programs too) then with many of our clients often being in financial straits themselves who we try and help here at Positive People this approach could help people to be more financially astute and more prepared to handle their personal budgets and finances.
As they mature and enter the world of work then using a digital portal to transact with different organisations will be no barrier to the majority of residents for NDH and other associations and may have the hidden benefit of reducing potential arrears as well.
Thanks very much to Marc and Ali for agreeing to be featured in this case study.
Positive People and Hopeful Families offer a lifeline to people who are not in work to help build confidence, skills and give a sense of hope for the future.
The projects give people the opportunity to get involved in local communities, meet new people and have fun through a range of activities.
Positive People and Hopeful Families are funded by the European Social Fund and The National Lottery Community Fund.