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Online current account and expense perception: the Finland case

Online current account and expense perception: the Finland case

Conto corrente online: il caso Finlandia

Increasingly, those who have an online current account prefer electronic payments to cash. But what can be the consequences of this progressive ban on traditional payments?

The food for thought comes to us from Finland, where more than 80% of payments are made by credit card, debit card or app. It seems that the increasing use of cards and electronic payments brings with it less control over one’s expenses: if the entire payment process becomes literally invisible, one loses track of actual expenses and paying is so easy that one no longer pays attention to disbursements. You spend practically without even bothering to check how much is left in your account.

This less control, combined with the ease of payment, if taken to extremes, can have disastrous effects. We see this in Finland, a country that has found its accounts dramatically in the red: households have reached an average debt per capita of 127%, while the arrears have increased by 30%. In short, the total ban on cash has literally bent the country’s economy.

To tell the truth, the growing indebtedness of families has several causes: on the one hand, it is favoured by interest rates at an historic low, which make it much cheaper to get into debt to meet expenses. Debts are being written off with new debts, aggravating an already compromised situation. But surely the digitization of credit services pushes strongly on the debt mechanism.
It is certainly not necessary to demonize the whole e-payment, or the very concept of online current account.

What the Finnish government is doing, after seeing that almost 400,000 people, 7% of the population, are in systematic arrears, is to run for cover with a national project (coordinated by the Bank of Finland together with the Ministries of Justice and Education) aimed at consolidating the financial knowledge of citizens. The aim is to make citizens capable of responsible use of credit cards. Although the country boasts one of the best education systems in the world, it does not seem to provide the population with sufficient knowledge to make correct and economically sustainable decisions in the medium to long term.

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