2 PAYMENT METHOD PROFILES: CASH
What conclusions can we draw from the available data?
1. The cost of cash is increasing… or is it? All six countries surveyed by the KC Fed saw their cost of cash increase over time in local currency terms. However, when we look at the cost of cash in percentage terms, i.e., accounting for the size of the transaction, we can see the picture is more mixed with only two of the six countries seeing an increase in the cost of cash as a percentage of cash spending. 0 2 4 6 8 2006 2013 2014 2018 2002 2009 2007 2013 2002 2009 1999 2018 Australia Canada Netherlands Norway Sweden United States Cost of Cash (per transaction) Graph 2.3
Cost of Cash (%)
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00%
2006 2013 2014 2018 2002 2009 2007 2013 2002 2009 1999 2018 Australia Canada Netherlands Norway Sweden United States
Graph 2.4
This is likely partly due to inflation, plus the cannibalization of cash spending by other payment methods (particularly card) at lower transaction values is pushing up average cash spend. However, the costs of cash acceptance are more fixed; so, in percentage terms, total costs don’t increase as much in comparison to in per transaction terms. 2. The cost of cash is highly variable, and not strongly linked to market size With the cost of cash acceptance varying from 0.59% in Norway in 2007 to 2.58% in Sweden in 2009 there is no clear consensus about what the actual cost of cash is. There also appears to be little identifiable link to market
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