As Australia flirts with the idea of a cashless society after coronavirus, Sweden has a warning: be careful what you wish for.

It was already well on the way to digital-only payments before the pandemic was declared, and the virus has only served to hasten the demise of cash.

“If you walk in the city in Stockholm nowadays, most of the stores will have signs saying they don’t accept cash anymore,” says Niklas Arvidsson, an associate professor at Sweden’s Royal Institute of Technology.

If you are one of the many Australians who now prefer to use a card over cash, this might not sound like such a bad thing.

But as Mr Arvidsson explains, there are now concerns Sweden went too hard too early and the rapid switch can have unintended consequences.

Sweden’s quick switch

Sweden has undergone a remarkable and comparatively rapid shift away from cash as its government and central bank left it to the market to decide what worked best.

Banks had no interest in keeping physical currency alive as they make no profit on cash purchases, and ATMs are costly to operate.

In fact, Mr Arvidsson said it was now difficult to even find an ATM outside a major city in Sweden.

‘Australia could be cashless in two years’

Australia is already well on the way to a cashless society.

The Reserve Bank’s 2019 Consumer Payments Survey, released in March, found that in the space of a decade cash went from the dominant form of payment to now barely cracking a quarter of transactions.

But it’s not all consumer-driven.

Last year, the Federal Government proposed laws to ban cash payments of $10,000 and more, threatening jail sentences of up to two years for people who didn’t obey.

Meanwhile, cryptocurrencies, once the dream of Silicon Valley tech-heads and Facebook, are now being seriously considered by governments around the world.

And in recent years the likes of India and the European Central Bank have phased out higher-value notes.

It’s led global firm Research and Markets to estimate that Australia could become the Asia-Pacific’s “first cashless society” by 2022. The Commonwealth Bank thinks we’ll probably get there by 2026.