Scandinavian Working Papers in Economics

Working Paper Series,
Sveriges Riksbank (Central Bank of Sweden)

No 212: The Costs of Paying – Private and Social Costs of Cash and Card Payments

Mats Bergman (), Gabriela Guibourg () and Björn Segendorf ()
Additional contact information
Mats Bergman: Department of Economics, Postal: Södertörn University College, SE-141 89 Huddinge, Sweden
Gabriela Guibourg: Research Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Björn Segendorf: International Secretariat, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

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.

Keywords: Cash payments; Card payments; Social costs; Private costs

JEL-codes: D12; D23; D24

37 pages, September 1, 2007

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