Sweden sees less cash, more problems

The members of Europe’s cash management association ESTA came together for its 35th annual conference on 19th and 20th May at Vienna’s Intercontinental Hotel with the rallying cry, “A bright future for cash!”

Outgoing president Kenneth Hoegman hailed the event’s speaker roster of experts and strong support by providers in the sold out exhibition area. Reflecting on the past year, Mr Hoegman took note of the pause on the EU harmonisation of cash payment limitations, hypothesising, not without reason, that input from ESTA and its members was partly behind this. He also noted the emergence of the realisation among national monetary authorities that the cash cycle may need intervention in order to secure access to cash. Finally, there was the referral from a German court to the EU Court of Justice of a crucial question: Do treaty provisions on legal tender mean that no Eurozone country can prohibit the payment of taxes in cash?

The kick-off sessions provided the customary updates from the ECB, European Commission and ESTA on their respective initiatives of interest. Henk Esselink from the ECB presented findings from its qualitative survey of cash cycle stakeholders, and of particular interest was the fact that while only 5% of banks consider cash services unimportant, 37% are planning to downsize their ATM estates. Turning to the retail side, Mr Esselink emphasised the importance of retail cash automation to enhance cash efficiency and security, stating, “There is a future for cash, but how bright it will be depends on whether we will be able to keep it convenient, efficient and safe.”

Thierry Lebeaux, ESTA secretary general, provided an overview of recent ESTA initiatives, in particular its efforts to provide constructive input into the European cash payments limitation investigation and the UK consultation on digital payments and access to cash.

Payments in Sweden: a cautionary tale

Andrea Nitsche of G+D then turned the attention of the conference to an evaluation of the Swedish payments system, in particular the access to cash following substantial changes to the cash cycle. Ragnar Olufsson, secretary of the Swedish parliament’s committee of inquiry into access to cash, set the scene by outlining the substantial drop in cash payments from 40% in 2010 to 15% in 2016, and the parallel drop in the number of bank branches providing cash services and the fall in cash withdrawn from ATMs. He contrasted this with the important point that 29% of the population state that they need cash to get by and that 68% wish to keep it as a payment option. The committee’s proposals focused on making it a legal requirement for large banks to provide reasonable access to cash and that the government should support measures to secure access, and clarifying the Riksbank’s role in the cash cycle.

Providing the view from the street was Staffan Nilsson, chairman of Rural Sweden, who told the story of the grass roots ‘cash uproar’ movement which gave voice to the concerns of affected communities – be they rural communities, pensioners or the vulnerable – to make clear that merely telling them to ‘catch up’ was not good enough. Peter Wesenberg from cash handler Nokas provided the suppliers view, or perhaps his own, when he opined that an important lesson from Sweden is: “Do not let commercial banks take charge of the whole infrastructure for cash handling!”

Graham Mott from the LINK ATM scheme contributed the UK view, namely an overview of the independent access to cash review and its recommendations. These include taking early steps to guarantee access to cash, for example through additional channels other that those provided by banks, and improving wholesale cash infrastructure. Interestingly, one input into the review was lessons from a LINK study trip to Sweden, including meetings with key stakeholders. One of them, Cecilia Skingsley, deputy governor of the Riksbank, advised the UK, “Look at your cash system now and be prepared to regulate while you have time. When cash levels get too low, it will be too late to put back in place systems which have been dismantled.”

It will be interesting to return to ESTA next year, to be held in Dublin from the 17th to 19th May 2020, to see what steps, if any, have been taken to future-proof the cash systems in Europe.