Cash, Girocard, credit card – every means of payment incurs costs for retailers. The cheapest way to do business is when customers pay with notes and coins or use the Girocard. This is the result of an analysis by the Deutsche Bundesbank.
On average, the cost per payment transaction for cash is 43 cents, while for the Girocard it is 60 cents. If you compare the costs to sales, the Girocard – which is still commonly called the ‘EC card’ – achieves the lowest value at 1.0 percent. International debit cards (Visa/Mastercard) and credit cards cause overall higher costs of up to one euro per transaction or 2.5 percent of sales.
Bundesbank: Costs must be understandable
Transaction fees, maintenance costs for payment terminals, personnel costs for managing the amounts of money collected – consumers are generally not aware of these costs for trading at the checkout because the individual payment process is almost always free of charge for them.
“Only if the costs are understandable can central banks and other players work towards efficient payment transactions,” says Bundesbank board member Burkhard Balz, explaining the central bank’s analysis, which is based on data from 2022 and 2023.
Are retailers only allowed to accept cash?
The study also shows that payments for smaller merchants are more expensive than for larger ones. According to the Bundesbank, larger retailers have “more negotiating power with payment providers”. While cash is accepted almost everywhere, small merchants more often do not offer digital payment methods because of the associated transaction fees and investment costs. Balz shows understanding: “At the end of the day, it is right that every company can decide how it wants to proceed.”
Europe wants to become more independent of US giants when it comes to payments
“Overall, the costs for retailers could be reduced through more competition in the market for payment methods, for example through the European payment alternative Wero or, in the future, the digital euro,” argues Balz. “Wero and the digital euro should be natural partners.”
Both initiatives have the common goal of making Europe more independent of providers, especially from the USA, such as Paypal, Mastercard and Visa, which currently dominate the market for digital payments in Europe.
- Wero is driven by banks and payment service providers and is currently available in Germany, France, the Netherlands, Luxembourg and Belgium. As with Paypal, direct mobile money payments from person to person are possible, and the first online shops are also accepting Wero.
- The European Central Bank (ECB) is targeting 2029 for the introduction of the digital euro.
Contrary to recurring fears, cash will not be abolished. “Consumers should continue to have the freedom to choose between cash and non-cash payment methods in the future,” emphasizes Balz. This also “absolutely” means that cash is reliably available: via bank branches, ATMs or via cashback at the store checkout.