As more and more countries are heading toward cashless societies, I became painfully aware of the realities of a country without cash as I toured Sweden this past summer. Not only did some stores not accept cash, but travelling by bus also required either an app or a pre-bought card (which can only be purchased by credit card). The penalty for travelling without a ticket is steep, 1,500 SEK (approximately USD 185). So I relied on friends who reluctantly accepted my cash, asking me “you don’t have swish?” Swish, apparently, is a mobile-payment app with as many as 23 million transactions per month.
Studies have found that fewer than 15 percent of all transactions in Sweden are made in cash, with the value of these cash transaction amounting to only 1% of the value of all transactions. According to a Royal Institute of Technology study, most Swedish retailers predict that Sweden will become cashless by 2030. Having read about the implications of this in several articles I was curious to find out how Swedish law regulates cashless transactions.
What is legal tender in Sweden?
5 kap 1 § 2 st Lag om Sveriges riksbank (SFS 1988:1385) [Act on the Swedish Central Bank] states that money issued by the Sveriges Riksbank is considered legal tender (giltiga betalningsmedel). Currently coins and bills are issued in the following dominions: 1 SEK coin, 2 SEK coin, 5 SEK coin, 10 SEK coin, 20 SEK Bill, 50 SEK Bill, 100 SEK Bill, 200 SEK Bill, 500 SEK Bill, 1000 SEK Bill.
What does it mean that something is legal tender?
“That bills and coins are legal tender means that each and every one is obliged to accept bills and coins as payment.” (Proposition [Prop.] 1986/87:143 at 64; See also Statens Offentliga Utredningar [SOU] 1986:22 at 108).
Are companies free to refuse cash as payment?
Yes. The Act on the Swedish Central Bank establishes what legal tender is, but the principle of contractual freedom in the Swedish Avtalslagen [Contract Law] regulates contractual relationships and by extension how you may pay for goods. Stores that display signs that they only accept credit cards are free to do so. The same applies for stores that display signs that they accept only cash, bitcoins or only old currency. (See also 7 § 2 st Lag om skuldebrev (SFS 1936:81).
Are government entities free to refuse cash as payment?
No. In an Administrative Supreme Court case from 2015 the Administrative Supreme Court found that a municipal hospital could not refuse to accept cash. (Administrative Supreme Court [HFD] Case, 2793-14). According to the circumstances of the case, the hospital had only made payment possible against an invoice. The hospital argued that the invoice could be paid in a number of ways, including by cash, by bringing the invoice to another municipal hospital that accepted cash. (Id. at 3).
The Administrative Supreme Court held that because relationships between municipal hospitals and private individuals cannot be governed by civil law principles, there could not be any exception to the legal tender rule based on contractual principles (as compared with those applicable to private companies, see above). Thus, the case at hand was an example of where the right to pay in cash in practice had become too limited by requiring that patients travel to another hospital to pay in cash. (Id. at 2).
Can Banks refuse to handle cash?
Yes. The same principle of contractual freedom that applies to private corporations also applies to banks. Most Swedish bank offices do not handle cash. Riksbanken [the Swedish Central Bank], in response to several demands from customers that “banks must handle cash”, clarified that banks are not legally obliged to accept cash. The Riksbank does not yield any power over banks to regulate whether they must accept cash over the counter or not. The Riksbank has, however, indicated that the Swedish banks’ collective move toward a cashless society is racing on too quickly, leaving some customers behind. For additional rules on private banks in Sweden, see Lag om bank- och finansieringsrörelse (SFS 2004:297) [Act on Banking and Financing Business].
Are there any legislative proposals to require banks to handle cash?
Several members of political parties in the Swedish Parliament have presented motions that banks be required to handle cash. For example: The Moderates; Swedish Democrats; and The Christian Democrats have all put forth such motions.
Will the EU Directive 2014/92 (on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features) affect the Swedish banks’ no-cash policies?
Proposition 2016/17:129, on how Swedish banks should meet the EU Directive’s mandates that customers have the right to withdraw and deposit cash, was presented in 2017. It has not yet been voted on in the Swedish Parliament. During the review process, a number of seniors organizations (Pensionärernas Riksorganisation, SPF Seniorerna, Svenska Kommunal-Pensionärernas Förbund, Sveriges Pensionärers Riksförbund, Riksförbundet Pensionärsgemenskap och Sveriges Hembygdsförbund) voiced a desire that banks should be legally obliged to accept cash over the counter. However, the Swedish government found that no additional measures needed to be made to increase the access to cash, specifically referring to planned installations of ATMs for deposit and withdrawals, and explaining that the EU Directive did not include the right to access cash. (Prop. 2016/17:129 at 30-31).
Have there been any problems in connection with the “cashless” state?
There have been some reported problems connected to ATM and credit card use. For example, in February 2017, a Swedbank computer glitch allowed for withdrawals that were greater than the balance on the bank account. Another ATM glitch happened in 2015, when Swedbank’s customers could not withdraw cash from ATMs or make online payments.
But the use of cash also has its problems. Proponents of establishing a cashless society in Sweden will remind you of the Västberga heist in 2009 where robbers got hold of million in bills and stashed them. These bills are no longer valid following the 2016-2017 issuance of new coins and bills.
What about the old bills and coins?
Of the invalid notes, 92% have been redeemed while only 46% of the coins have been redeemed. For persons who still have old 100 and 500 bills in their mattresses, the old bills can be redeemed until June 30, 2018.
Is Sweden the only country going cashless?
If you visit Sweden, don’t worry about exchanging your dollars for the new SEK bills. Just use your credit card. The Swedes will like you more for it.