Social costs of POS payments in the Netherlands 2002-2012: Efficiency gains from increased debit card usage

The overall costs of the payment system to society are considerable. These costs depend on the relative usage of the available payment instruments, which differ in the costs that each entails to market participants in the payment chain. In the Netherlands, debit card payments have become less costly than cash payments. In 2012 an average cash payment cost EUR 0.44 whereas an average debit card payment cost EUR 0.30. Between 2002 and 2012, the number of debit card payments more than doubled to 2.5 billion, while cash usage declined to 3.75 billion payments. As a result of the changing payment behaviour of the Dutch, the total costs of cash and debit card payments to society declined by 10% from over EUR 2.6 billion in 2002 to less than EUR 2.4 billion in 2012. Relative to GDP, the social costs dropped from 0.57% to 0.40% of GDP. The costs incurred by banks for cash and debit card payments have been rather stable. Retailers, on the other hand, have achieved major cost reductions. The trend towards more card and less cash usage is expected to continue. From a cost perspective this will be beneficial for society as a whole.