The National Bank is resolutely holding on to its prestigious banknotes and coins. Yet out of all forms of payment cash is the most expensive for Swiss society.
A cost is generated not only to acquire goods and services, but also in the act of payment itself, according to a new study, which the University of St.Gallen (HSG) published on Thursday.
Cash is particularly problematic from an economic perspective. If the underlying payment infrastructure is already in place, cash comes out as the most expensive form of payment, regardless of the transaction value, followed by credit and debit cards, the study has found.
Card Transactions Are a Fraction of the Cost
So while credit and debit card payments incur costs of 0.80 and 0.50 francs, a cash payment of 20 francs costs a company 2.10 francs, the financial scientists at the HSG write.
The authors say the study draws on an extensive database, which was compiled by surveying financial institutions, infrastructure providers, and retailers in Switzerland. Time measurements of payments made at Swiss sales points have also been carried out for the first time.
Banks and Retailers Foot the Bill
The researchers make a distinction between the private costs and the resource costs of the various payment methods. Private costs are the total costs that retailers, financial institutions, and consumers incur. On the other hand, resource costs reflect effort in the form of internal processes, but also the time costs for paying, withdrawing, and counting cash, as well as the capital and technology costs.
These costs are very unevenly distributed among the various actors. Retailers account for 0.6 percent of GDP due to transaction fees, which is the largest share of private costs. This compares with the financial sector, which accounts for 0.53 percent of GDP and shoulders the largest share of resource costs. Consumers come next, with costs totaling 0.35 percent (private costs) and 0.1 percent (resource costs).
On the other hand, the Swiss National Bank’s (SNB) costs are minimal at around 0.03 percent of GDP, it continues.
In Spite of Structural Change
This is striking, as the Swiss currency guardians have shown themselves to be dyed-in-the-wool fans of cash in recent years by repeatedly bringing out new series of banknotes into circulation despite the increasing popularity of electronic payments.
All in spite of structural changes in payment transactions, increased money laundering risks associated with certain series of banknotes, and soaring security printing budgets.
It appears that the Swiss National Bank is steadfastly clinging on to cash through thick and thin. But this stance costs it the least compared with other payment transaction participants.
