IDEAS home Printed from https://ideas.repec.org/p/hhs/rbnkwp/0212.html
   My bibliography  Save this paper

The Costs of Paying – Private and Social Costs of Cash and Card Payments

Author

Listed:
  • Bergman, Mats

    () (Department of Economics)

  • Guibourg, Gabriela

    () (Research Department, Central Bank of Sweden)

  • Segendorf, Björn

    () (International Secretariat)

Abstract

Despite the central role of payments in theoretical and policy oriented economics, there is surprisingly little known about the costs of different payment instruments. We estimate social and private costs of cash, debit and credit card payments in Sweden in 2002. The combined social cost of providing these payment services is approximately 0.4 per cent of GDP. Debit and credit cards are socially less costly than cash for payments above EURO 8 and EURO 18, respectively. Corresponding thresholds for consumers’ private costs are somewhat higher. Data indicate a too extensive use of cash relative to card payments in terms of both private and social costs.

Suggested Citation

  • Bergman, Mats & Guibourg, Gabriela & Segendorf, Björn, 2007. "The Costs of Paying – Private and Social Costs of Cash and Card Payments," Working Paper Series 212, Sveriges Riksbank (Central Bank of Sweden).
  • Handle: RePEc:hhs:rbnkwp:0212
    as

    Download full text from publisher

    File URL: http://www.riksbank.se/upload/Dokument_riksbank/Kat_publicerat/WorkingPapers/WP212.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Garcia-Swartz Daniel D. & Hahn Robert W. & Layne-Farrar Anne, 2006. "The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-24, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bruno Karoubi & Régis Chenavaz & Corina Paraschiv, 2016. "Consumers’ perceived risk and hold and use of payment instruments," Applied Economics, Taylor & Francis Journals, vol. 48(14), pages 1317-1329, March.
    2. Marc BOURREAU & Tommaso VALLETTI, 2015. "Competition and Interoperability in Mobile Money Platform Markets: What Works and What Doesn’t?," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(99), pages 11-32, 3rd quart.
    3. O'Toole, Ronnie, 2013. "The Usage, Cost and Pricing of Retail Payments in Ireland," Quarterly Bulletin Articles, Central Bank of Ireland, pages 74-84, April.
    4. Bolt, Wilko & Jonker, Nicole & van Renselaar, Corry, 2010. "Incentives at the counter: An empirical analysis of surcharging card payments and payment behaviour in the Netherlands," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1738-1744, August.
    5. Takala, Kari & Virén, Matti, 2008. "Efficiency and costs of payments : some new evidence from Finland," Research Discussion Papers 11/2008, Bank of Finland.
    6. Jakub Gorka, 2012. "Synthesis of studies on costs of cash and non-cash payment instruments (Synteza badan kosztow gotowki i bezgotowkowych instrumentow platniczych )," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 10(39), pages 223-241.
    7. Alexandrova-Kabadjova, Biliana & Negrín, José Luis, 2009. "What drives the network’s growth? An agent-based study of the payment card market," Working Paper Series 1143, European Central Bank.
    8. Wilko Bolt & Sujit Chakravorti, 2010. "Digitization of Retail Payment," DNB Working Papers 270, Netherlands Central Bank, Research Department.
    9. Verdier, Marianne, 2012. "Interchange fees and inefficiencies in the substitution between debit cards and cash," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 682-696.

    More about this item

    Keywords

    Cash payments; Card payments; Social costs; Private costs;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:rbnkwp:0212. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lena Löfgren). General contact details of provider: http://edirc.repec.org/data/rbgovse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.