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Cash costs the German economy EUR12.5 billion per year

13 June 2013  |  9152 views  |  3 cash

The total cost of handling physical cash in the German economy has been estimated at EUR12.5 billion per year, by a team of academics in Berlin.

The study, conducted by the Research Center for Financial Services at Steinbeis University, found that each German citizen pays around EUR150 per year to keep the cash system running.

Cash costs add up throughout the whole cash cycle: from production costs, transportation costs, insurance costs, cash handling, security and through to losses of interest. With EUR6.7 billion, the largest burden is carried by merchants, followed by banks with EUR4.5 billion.

The study explores a number of ways countries can reduce cash payments including implementation of limits for cash transaction amounts that exceed a specific level and banning/ limiting cash payments for cigarettes and other cash-based vending machines.

The report's author Professor Jens Kleine says: "In order to reduce the cost of the payment system, individuals need to understand the real costs of the different payment methods."

Comments: (3)

Jan-Olof Brunila
Jan-Olof Brunila - Swedbank - Stockholm 14 June, 2013, 07:20

..a number of ways to limit or ban cash usage...? Why not build a business model that makes it profitable to provide electronic payments instead of cash? If banks and payment institutions do not earn enough revenue from electronic payments to make the market attractive to compete for the cash society will remain in place since the good, secure and convenient, price worthy electronic payments will not emerge. Bans and legal restrictions will cause public displeasement and cost votes and therefore such "stick" measures will not be implemented. In Sweden the journey from 90% cash payments in retail outlets to nearly 80% card payments has been built on a sound business model and a competitive market allowing payment service providers to make the large investments needed to get the customers onboard the electronic payments. Carrots need to be distributed - not sticks!

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Ludger William
Ludger William - Oney - Lille 14 June, 2013, 08:10

The great thing about this study is that it gives an answer to a longlasting question that has been running around ECB/EC/EU regulators.

The good thing would have been to explain the way they have reached this result.

The best thing would have been to provide comparable figures high lightening Cards vs Cash vs Check vs SDD vs SCT...

I guess such verified and certified comparison will push regulator to formalise guidance rules  in coming european directives looking at it through the Prism of sovereignity...;)


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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 June, 2013, 11:49

I fully agree with Jan-Olof Brunila. That said, regulators and academicians always seem to propose bans: 

Five Ways to Stimulate Electronic Payments (Hint: Discouraging Cheques Is Not One Of Them)

In this process, they not only betray their inability to come up with superior business models but also underestimate the public backlash to their harebrained proposals for banning popular and convenient method of payments, as the UK Payments Council discovered to its dismay when it tried to discontinue cheques from 2018. 

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