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The Costs of Payment Methods in the Retail Sector (307965)
Frank Horst, EHI Retail Institute*Johana Kimmerl, Deutsche Bundesbank
Fabio Knümann, Deutsche Bundesbank
Keywords: Costs, Payment methods, Retail sector, Cash
Recent years have seen both academics and the public at large taking a greater interest in the costs associated with means of payment. As part of its statutory mandate, the Bundesbank seeks to hone its understanding of the costs of different payment instruments, and thereby contribute to an objective discussion of their advantages and drawbacks. Focusing on the retail sector, the study “The costs of payment methods in the retail sector” looks at a portion of the costs generated in the economy by the use of payment media.
Just over 76% of all transactions in the German retail sector in 2018 were cash payments. As a per-centage of sales, cash payments still account for just under 50%. Innovations in the field of payments are giving consumers an increasing variety of payment instruments to choose from. Against this backdrop, the question of how much cash and cashless payments cost the retail sector is becoming increasingly important – because whatever means of payment consumers decide to use, they all generate costs.
According to the present study, the total costs of payment procedures to German retailers in the narrower sense amount to €5.7 billion per year. Cash payments generate roughly €3.8 billion in costs. Taken together, card- based payment methods cost around €1.7 billion per year.
Cash payments cost just under €0.24 per transaction, making them currently the most costefficient means of payment for retailers from a transaction perspective. Debitcard payments cost €0.33 per transaction. On account of higher transaction costs, credit card payments work out more expensive than cash or debitcard payments from every perspective and generate costs of just under €1 per transaction. In terms of sales, however, card payments prove cheaper for the retail sector than cash payments. When interpreting the figures, it should also be borne in mind that the costs presented are based on average values and that different payment structures have to be taken into account.