22
23
CMSPI – IAC State of the Industry Report
CMSPI – IAC State of the Industry Report
30%
study also looks at the cost of debit card acceptance in these countries for comparison. These are the key conclusions we have drawn from the available cost of cash literature: 1.The cost of cash is rising over time For all 6 countries covered by the Kansas City Fed’s report, the relative cost of cash has risen in recent years (see Graph 1.6). This is perhaps not surprising considering cash volumes are declining in many countries (Graph 1.7), and the cost of cash acceptance for merchants is partly fixed. However, this underlines a challenge that merchants in many countries face with the cost of payments acceptance: it is rising across the board (see Section 1.2). With card fees high and rising in many jurisdictions, and expensive new payment methods such as BNPL entering the market, merchants across the world are continually faced with a rising weighted average cost of payments acceptance.
25%
20%
15%
10%
5%
0%
2016
2017
2018
2019
2020
2021
Australia
Canada
Netherlands
Norway
Sweden
United States
$7.00
$7.00
$6.50
6.50
Graph 1.7 – Cash Volumes as a Share of Consumer Spending by Country (2016-2021)) 24
$6.00
$6.00
2. Cash is less expensive to accept than debit cards in the U.S. This is a surprising finding, considering that cash handling is so manual and labor intensive and card payments can be sent instantly with practically no variable costs. However, it is not the case in every country; in fact, in every other country covered by the Kansas City Fed the cost of debit acceptance was lower or equal to the cost of cash acceptance in the most recent year where data was available. This difference is likely explained by approaches to interchange fee regulation (see Section 5).
$5.00
$5.00
$4.00
$4.00
$3.00
$3.00
$2.58
2.58
United States
-147%
$2.00
$2.00
1.32
$1.32
1.28
$1.28
Sweden
$1.00
$1.00
55%
0.31
$0.31
0.29
0.29
$0.29
$0.29
$0.24 0.24
0.20
0.19
$0.20
$0.19
0.17
$0.17
0.12
$0.12
$0.00
$0.00
Norway
8%
Australia 2006 & 2013 Australia 2006 & 2013
Canada 2014 & 2018
Netherlands 2002 & 2009
Norway 2007 & 2013
Sweden 2002 & 2009
United States 1999 & 2018
Canada 2014 & 2018
Netherlands 2002 & 2009
Norway 2007 & 2013
Sweden 2002 & 2009
United States 1999 & 2018
Netherlands
5%
Graph 1.6 – Average Cost per Cash Transaction by Country 23
Canada
0%
Australia
17%
Graph 1.8 – Merchant Cost Difference between Debit Card v. Cash 25
23 Kansas City Fed
24 Euromonitor 25 Kansas City Fed
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