07 February 2016

ECB explores the social costs of payments

01 October 2012  |  4733 views  |  1 Pound Coin Cash

The social costs of making retail payments in the EU amounts to EUR45 billion, or nearly one percent of the combined GDP of the 13 member states surveyed by the European Central Bank.

The study - which explores the costs to central banks, banks and payments infrastructures, cash-in-transit companies and retailers (but excludes consumers and households) - finds the cost burden is borne equally by banks and retailers.

Cash payments account for nearly half of the total costs but, as the most commonly used payment instrument, has on average, the lowest social costs per transaction, at €0,42, closely followed by debit cards with costs of €0,70 to society. Cheques are the most expensive form of payment, with unit costs of €3,55.

However, in five of the 13 countries covered, the costs were lower for debit cards. Such rankings depend on characteristics specific to each country's payment system, on the market size and its development, and on payment behaviour.

Benoît Coeuré, member of the ECB's executive board says the results underline how much retail payment services matter for European society and in the economy as a whole.

"The study will shed light on the debate about how the European market for payment services will look in the future and how overall cost efficiency can be improved even further," he says.

Read the full report:» Download the document now 2.6 mb (PDF File)

Comments: (1)

A Finextra member | 02 October, 2012, 14:54

Are "social costs" different from "costs"? If not, this finding undermines the business case for SEPA. The original SEPA objective was to lower the cost of payments in the EU from its supposedly-current level of 3% of EU GDP to 1%, the 1% figure being considered world class. If the cost is now less than 1%, then the goal has been over-achieved without SEPA and SEPA can be abandoned. Result! Job done!

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