What We Can Learn From Finland, A Pioneer In Digitization Of Payments

Debbie Fletcher

Everywhere you look, you can see the impact of digitization. We’re a world hooked on digital, from the music we play to the way we earn our living. But how far will this go? Could we soon be in a world where you no longer need to carry cash when you head out the door?

Finland is proving to be a pioneer when it comes to payment habits. It’s well worth taking notice of what’s happening in this country as we weigh the future for digital payments elsewhere.

Finland’s fondness for digital payments

Finns make almost twice as many cashless transactions as their European Union neighbors, and more than 60% of these are made by card.

Most strikingly, Finnish consumers use barely any direct debits. These payments, which in America are funneled through the Automated Clearing House and account for regular bills such as rent or loan repayments, represent just 0.12% of transactions in Finland. That’s stark when compared to 21.3% in the EU.

Instead, payments tend to be handled through “e-invoicing” and credit transfers, which are deemed more advanced and more flexible. The average Finn makes 153 credit transfers a year, about three times as many as people in the wider EU region do.

Two-thirds of consumers get e-invoices through their online bank, and when it comes to B2B transactions this rises to 80%.

When an e-invoice is sent, the recipient can accept the proposition and then instigate a credit transfer. It’s like the old days of being sent and paying an individual bill, as opposed to automated payments, only digitized.

Paying bills this way – and a habit of banking online – naturally makes the Finns open to other forms of digital transactions. The number of cash machines has fallen by 20% in four years, and cash withdrawals themselves are down by about 16%.

Lessons to be learned

It seems, therefore, that consumer willingness to ditch the cash does not happen in isolation; it comes as part of a broader cultural shift over attitudes to money. People won’t suddenly stop wanting to use deposit slips; they’ll need to have a safe transition to a digital equivalent.

There’s a bigger distance to travel in the U.S. As the Chicago Tribune notes, a quarter of U.S. payments are still made in cash, and nearly 9.6 million American households do not have a bank account.

The Finns have a deeper cultural link to digital than many of their international counterparts, as things stand today. But it does seem likely that the trend is toward a more cashless environment, fueled by advances in digital technology. As with all developments, the technology surrounding currency is not growing in isolation. There are other uses to be had from blockchain aside from underpinning bitcoin, for example. The more uses it has, the more sophisticated it gets. And this, in turn, has a knock-on effect to the safety and ease of digital currency transactions.

Finland shows us that digitization of payments needs to be embraced everywhere – from the liquor store to the paycheck – and that digital alternatives to the payments we currently make have to prove their worth to win over customers. A compelling case needs to be made before we all kiss cash purchasing goodbye.

Since some customers are more eager for digitalization than others, it’s essential to not alienate the people who are slower to adapt. Learn 4 Ways to Digitally Disrupt Your Business Without Destroying It.


About Debbie Fletcher

Debbie Fletcher is an enthusiastic, experienced writer who has written for a range of different magazines and news publications over the years. Graduating from City University London specializing in English Literature, Debbie has a passion for writing has since grown. She loves anything and everything technology, and exploring different cultures across the world. She's currently looking towards starting her Masters in Comparative Literature in the next few years.