Why Are Scandinavians So Far Ahead of Americans in Using Electronic Payments ?

Americans are the biggest users of checks in the world. Close to 100 billion checks are written every year in the United States, and over three-quarters of noncash transactions are conducted with paper. In contrast, in most countries of Europe, more than two-thirds of noncash transactions are electronic, with Finland and Sweden having the greatest proportion of online banking customers of any countries in the world. Indeed, if you were Finnish or Swedish, instead of writing a check, you would be far more likely to pay your bills online, using a personal computer or even a mobile phone. Why do Europeans and especially Scandinavians so far outpace Americans in the use of electronic payments?

First, Europeans got used to making payments without checks even before the advent of the personal computer. Europeans have long made use of so-called giro payments, in which banks and post offices transfer funds for customers to pay bills. Second, Europeans—and particularly Scandinavians—are much greater users of mobile phones and the Internet than are Americans. Finland has the highest per capita use of mobile phones in the world, and Finland and Sweden lead the world in the percentage of the population that accesses the Internet. Maybe these usage patterns stem from the low population densities of these countries and the cold and dark winters that keep Scandinavians inside at their PCs. For their part, Scandinavians would rather take the view that their high-tech culture is the product of their good education systems and the resulting high degree of computer literacy, the presence of top technology companies such as Finland’s Nokia and Sweden’s Ericsson, and government policies promoting the increased use of personal computers, such as Sweden’s tax incentives for companies to provide their employees with home computers. The wired populations of Finland and Sweden are (percentage-wise) the biggest users of online banking in the world.

Americans are clearly behind the curve in their use of electronic payments, which has imposed a high cost on the U.S. economy. Switching from checks to electronic payments might save the U.S. economy tens of billions of dollars per year, according to some estimates. Indeed, the U.S. federal government is trying to switch all its payments to electronic ones by directly depositing them into bank accounts, in order to reduce its expenses. Can  Americans be weaned from paper checks and fully embrace the world of high-tech electronic payments?