The world is on the brink of having its first ever entirely cashless day

by Sebastian Siemiatkowski – CEO of Klarna

How soon will we reach the first cashless day, when all your purchases will be made without a note or coin changing hands? In Sweden, it’s any day now. In 2010, 40 per cent of Swedish retail transactions were made using cash; by 2014 it was down to 20 per cent and it’s still falling. And e-commerce is growing.

At Klarna, we make a payment to the retailer immediately – not just online, but in-store too – and customers settle up later, so you can buy anything without using cash.

The question is: what’s next? There are three big changes coming in the way we discover products. The possibilities of cross-border e-commerce and the huge impact of finance-tech innovation on established banks will have a knock-on effect on e-commerce, radically altering the way we shop and driving a global move towards a cashless economy.

E-commerce today typically involves browsing products on numerous sites, or searching on Google or reading a blog post. In the next five years, that will change. Think of the infrastructure behind this as a big cloud which knows where, what and how much everything is. You’ll discover products that you are interested in and hit the “buy” button right there.

Our own company is working with Wish, which offers goods from Chinese manufacturers, shipped directly to their European or US consumers. Prices are kept low by cutting out the middle-men. This is not a problem for brand-name products – because people still want to buy Levi’s. But if you are a retailer selling less-known goods – or even Chinese manufactured goods with lower-value brand names stamped on the box – you’re going to be in trouble.

As that world dawns, everything about the way we pay will change. The whole payment industry has been so focused on one-click payment – but that’s not where the big opportunity is. Right now, the bank issues your credit card – but we don’t need them.

At Klarna, we can identify customers: we have a bank licence with exactly the same compliance, the same independent risk controls and the same capital requirements as anyone else.

Within a couple of years banking will develop into a platform on which specialised third-party players will operate. Companies such as ours will be able to replace your credit or debit card, and when you start needing services such as mortgages or savings, other specialised players will be there based on your preferences.


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