How does a payment work, and why did cash disappear from the shops?

You hold your card against the terminal. It beeps. The cashier says thank you, and you leave. The approval can come within a second, and that is exactly why almost nobody knows what happened during it. Clearing and final settlement happen in later steps.⁵

This article explains it, without technical words. It then goes through how Swedes pay according to the Riksbank's own survey, and shows why the same survey can say, at the same time, that almost everyone uses Swish, the Swedish mobile payment app, and that almost nobody pays with Swish in a shop. Finally it looks at the rest of the world, where the story has happened in a different order.

A payment is a message. The money follows.

The money in your account is a number at your bank.¹ A payment is an instruction to reduce that number and increase someone else's.¹ If you both have the same bank, that is all it takes: the bank changes two numbers in the same book.¹

If you have different banks, there are two steps.⁵ First a message is sent: your bank promises to pay the shop's bank. That is what happens in the second when the card beeps. The shop gets a yes, and you can leave. Then, later, the banks settle up with each other for real, and only then has the money moved. That step is called settlement, and it is invisible to you.^{1, 5}

The difference between the two steps is clearest in an ordinary bank transfer. The Riksbank writes that a transfer made through online banking on a Friday afternoon reaches the recipient on Monday morning at the earliest.² The message is sent on the Friday; the money moves when the banks settle up, and that happens on weekdays.^{2, 5} The Riksbank also points out that Swedish companies in practice cannot make instant payments to each other, because almost no bank offers such a service apart from Swish, which does not work between companies.²

That is the background for understanding the term instant payment. An instant payment is one where both steps happen at once: the recipient has the money in their account within seconds, whatever the day of the week.¹ In Sweden, Swish is by far the largest service for such payments, according to the Riksbank.¹ Since 2024 there has been a Nordic service for payments within Sweden and between Sweden, Denmark, Norway and Finland, but not every Swedish bank offers it.¹

The second when the card beeps

Take the card purchase in the shop once more, this time with the roles spelled out. Four parties are involved: you, the shop, the shop's bank and your bank.^{6, 7} When you hold your card against the terminal, the terminal sends a question to your bank, through the shop's bank and the network the card belongs to: is there enough money to cover the amount, and is the card in order?^{5, 7, 8} The answer comes back the same way. The beep is the answer yes.

At that moment your bank has reserved the amount in your account, and the shop has a promise.⁸ The money has not yet left your bank. It does so later, when the day's payments are added up and settled between the banks in bulk rather than purchase by purchase.^{1, 5} That is the settlement from the previous section, the one that is invisible to you. It is why a card purchase can show as "reserved" in your account for a while before it becomes an ordinary line on your statement.⁸

Cash works the other way round. The note in your hand is both the message and the money at once.¹ No question is sent to any bank, and nothing is settled afterwards. That difference is part of the background to the Riksbank's advice on preparedness further down in this article.

How Swedes pay, counted in two ways

The Riksbank regularly asks a sample of the population about their payment habits. It is a survey: the figures are what the respondents say, not a count of actual transactions.¹ The latest round was collected in September 2025 and answered by 2,008 randomly selected people aged 18 to 84, weighted by sex, age and region.¹ The survey asks two kinds of question, and the difference between them is the whole point of this section.

Two kinds of question about the same thing

The first kind is "have you used this in the past month?" Here 91% say they have used Swish, up from 82% in 2023.^{1, 10} 85% have paid with a physical debit card.^{1, 10} The share who have used a card in their phone, a service where the card is stored in the phone, has risen from 3% in 2018 to 34%.^{1, 10}

The second kind is "how did you pay at your last purchase in a physical shop?" Here the picture looks completely different. 61% answer physical debit card.^{1, 10} 18% answer card in the phone, up from 9% in 2023.^{1, 10} Adding up all forms of card, debit card, credit card and card in the phone, it comes to about 92% of the payment methods at the last purchase in a physical shop.^{1, 10} Only 2% paid with Swish at their last purchase in a shop.^{1, 10} And 5% paid in cash.^{1, 10}

Why the same survey gives two answers

Same survey, same people: 91% use Swish, 2% paid with Swish at the till.^{1, 10} Neither figure is wrong. The first measures whether people used the service at all during a month, for example to split a restaurant bill. The second measures what happened on a single occasion, in a shop. Swish is everyday between people and rare at the till. The card is the opposite.

The rule to take away is simple: when someone says that "everyone uses" something, ask what was measured. "Has used in the past month" and "used on the last occasion" are two different questions, and they give different answers about the same thing.

Cash: from 40% to 5

At the last purchase in a shop, 5% paid in cash in 2025. In 2023 it was 10%. Fifteen years earlier it was 40%.^{1, 10}

The Riksbank points to several explanations. Fewer and fewer businesses accept cash, many people find it easier to pay digitally, and about one in three who wanted to pay cash in a shop have been turned away.¹ What the survey also shows is the order of events. The card took over the till first. Then the card moved into the phone: from 9% of purchases in 2023 to 18% in 2025.^{1, 10} Swish took the payments between people, but not the till. Cash fell in almost every survey, with one exception between 2022 and 2023, when the share rose from 8% to 10%.^{1, 10} What took its place was the card, not some new way of paying.

Sweden is not alone, but it is far ahead. At the last purchase in a shop, 5% paid cash in Sweden in 2025 and 2% in Norway the same year. The Danish figure, 8%, comes from a survey from December 2023.^{1, 11, 12, 13} In the euro area, cash is still the most common way to pay in shops, according to the Riksbank, but the share is falling there too.^{1, 14} That figure is measured in a different way: 52% of all purchases in shops during 2024, not 52% of the respondents' last purchase.

That cash is used less does not mean that few people miss it. Almost half of the respondents in the Riksbank's survey think it is fairly or very negative that cash use is falling in Sweden, a share that was 36% in 2022.¹ The view is more common among those who live outside the big cities and among people over 65.¹

The Riksbank still wants to keep cash

While the Riksbank counts how cash is disappearing from the shops, it gives advice in the other direction. The Riksbank recommends that households keep about 1,000 kronor in cash per adult at home, to be prepared.^{1, 2} One of the reasons is linked to the first section: a digital payment is a message that has to get through, and that requires electricity, networks and banks to work.¹ A note in your hand requires none of that. The Riksbank also points to those who have no payment account or for other reasons cannot use digital payment services.^{1, 2}

The Riksbank also proposes a limit of 10,000 kronor for cash purchases in shops, and takes part in a European project for instant payments between Swedish kronor, euros and Danish kroner.^{1, 2} These are the Riksbank's proposal and the Riksbank's participation; they are reported here as facts about what the authority does, nothing more.

The rest of the world: the account came before the card

In Sweden almost everyone has had a bank account for so long that the question is never asked. In large parts of the world the account itself is the big change, and it has happened in the past fifteen years.

The account, the phone and the regions

In 2024, 79% of the world's adults had a financial account, up from 51% in 2011, according to the World Bank's Global Findex survey.^{3, 15} At the same time, about 1.3 billion adults in 2024 had no account at a financial institution or a mobile money service, according to the same source.^{3, 15} Of them, about 900 million own a mobile phone, and 530 million a smartphone.³

The phone is the key to the difference from Sweden. Here the account came first, then the card, then the phone. In many countries the phone is the account: 86% of the world's adults own a mobile phone, and 42% of adults in developing economies made a digital payment to a merchant, in a shop or online, during 2024, up from 35% in 2021.^{3, 15}

The differences between regions are large. In East Asia and the Pacific, 83% of adults have an account. In South Asia it is close to 80%, where India pushes the level up with 90% of both men and women. In Latin America it is about 70%, in sub-Saharan Africa 58%, up from 49% in 2021, and in the Middle East and North Africa 53%, up from 45%.³

Instant payments elsewhere

And instant payments, which Swedish companies lack between themselves, exist as national infrastructure elsewhere. The World Bank mentions UPI in India and PIX in Brazil as examples of systems for instant transfers.³ Anyone who thinks Sweden is first in everything to do with payments has a couple of examples to think about there.

Global Findex is based on surveys in 141 countries and economies.^{4, 15} Just like the Riksbank's survey, it measures what people say, and the two surveys ask different questions. So the figures from the two sources stand separately in this article and are never added together.

What to take away

At the last purchase in a physical shop in 2025, about 92% paid with some form of card and 5% in cash, against 40% fifteen years earlier.^{1, 10} 91% had used Swish in the past month, but only 2% said they used Swish at the till.^{1, 10} The shift is structural: a payment is a message followed by settlement, and that requires infrastructure, acceptance and habits that change over decades, not quarters. Follow three recurring figures: the cash share at the last purchase and the share who pay with a card in their phone, both in the Riksbank's payments report and its data tables,^{1, 10} and the share of adults in the world with an account, in the World Bank's Global Findex.^{3, 15}

The next episode is S5:E2 E-commerce, about what happens after the buy button, counted in Swedish parcels.

Education, not advice.