The FINANCIAL — Each German citizen pays around EUR 150 per year to keep the cash system running, according to the findings on the ‘Cost of Cash’ by the Research Center for Financial Services at Steinbeis University.
The total private cost of cash in Germany is EUR 12.5 billion per year – a cost which the banking and retail sectors pick up and partly pass onto individual consumers, according to the study. 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 EUR 6.7 billion, the largest burden is carried by merchants, followed by banks with EUR 4.5 billion and consumers with EUR 1.3 billion.
“The use of cash, which is still significant in many countries around Europe, comes at a high cost to the economy. We believe that innovation in electronic payments not only delivers greater transparency of transaction but, as we see from today’s report, creates a more cost effective way of paying for all stakeholders,” said Javier Perez, President of MasterCard Europe.
Card payments were found to reduce the cost of transactions to all parties as many of the costs associated with cash are not applicable. 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.
“In order to reduce the cost of the payment system, individuals need to understand the real costs of the different payment methods,” said Professor Kleine while speaking about creating an efficient payment system.
This study not only shows the cost of cash but highlights the possible savings and economic benefits if card payments are increased. Effectively communicating the cost of cash message, will help reduce the economic costs of payment processes and the payment system.
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