Bloomberg reports that Sweden, a leading country in the cashless society movement, is facing a significant increase in online fraud in recent years.
Official statistics from the Swedish government show that the total damage from online fraud in 2023 amounted to 1.2 trillion Krona (4.2 billion USD), doubling from the figures in 2021.
Sweden has an online payment system called BankID, similar to our own mobile payment apps, which has been in use since 2001 and has become a daily payment method for Swedes. However, it has also become a channel for criminals due to its fast transaction capabilities.
The government’s approach in Sweden is to press banks to enhance security measures, such as requiring additional approval from a trusted second party for large transfers. However, this has not been very effective as online fraudsters use sophisticated methods like creating fake companies and documents to gain access to the BankID system and siphon money through avenues like bank loans and government welfare benefits.
The escalating issue has led the Swedish government to establish a new agency called the Payment Authority to specifically address fraud in the social insurance system. This agency will have the power to analyze and audit businesses, as well as manage payments to other public sector agencies. All payments to the government will go through this new system starting on January 1, 2027.
Source: Bloomberg
TLDR: Sweden, a pioneer in the cashless society, is grappling with a surge in online fraud, prompting the government to establish a Payment Authority to combat fraud in the social insurance system.
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