Estudio de las actas y diligencias

The authors drew the following main conclusions:

− The banks improved efficiency: they are conducting more transactions at lower costs than in the past.

− Large volume electronic services have the lowest unit cost; the ratio of electronic payments has been rising for many years, partly as a result of banks’ pricing policies. The price of payment services reflects the relative differences in underlying costs.

− With regard to the methodology of the cost survey, it was established that the merchant survey would be best conducted by a research team, as the response rate was low among merchants and the quality of responses was also poor in some cases. The diary was regarded as more effective than the phone survey in relation to households, although they were also satisfied with the quality of the latter. The ABC method worked well with banks.

Table 80

Total and unit social cost of payment instruments in Norway in 2007 social costs (NOK million) No. of transactions (in millions) Value of transactions (NOK billion) Unit social costs (NOK/ transaction) Unit social costs (ø/NOK) cash, total 3,493.3 494.7 209.3 7.06 1.67

cash transactions (in gross way, i.e. disbursed on

payments only) 3,493.3 285.0 62.1 12.26 5.63

Cash transactions (in net way) 514.3 285.0 62.1 1.80 0.83

Cash withdrawal via ATM 1,296.8 98.5 119.1 13.17 1.09

Cash deposits and other cash withdrawals at

banks 1,682.1 33.5 50.21

Cash withdrawals at merchants (so-called

BankAxept Cash back) 0.0 77.7 28.1 0.00 0.00

cards total 5,355.9 902.4 359.1 5.93 1.49

Domestic (BankAxept) card scheme 3,326.8 805.3 298.1 4.13 1.12

International card scheme 2,029.1 97.1 61.0 20.90 3.33

Debit cards (only for banks) 2,355.4

Credit cards (only for banks) 965.7

so-called giro,total (a+b) or (c+d+e) 2,308.5 510.7 10,428.8 4.52 0.02

Elektronic giro (a) 1,481.6 462.3 10,212.2 3.20 0.01

Paper based giro (b) 826.9 48.4 216.6 17.08 0.38

Direct debits (c) 130.1 49.6 219.7 2.62 0.06

Credit transfers (d) 2,113.9 453.5 10,149.4 4.66 0.02

Other transfers (e) 64.5 33.8 1.91

Internet banking (part of elektronic giro) 1,032.4 318.8 6,496.3 3.24 0.02

society, total 11,157.8 1,830.1 10,969.1 6.10 0.10

Point of sale (POs) total (cash and card) 8,849.2 1,319.4 540.3 6.71 1.64

Note: the ø (øre) is the subunit of the Norwegian krone and one hundredth of the krone. Source: Norges Bank.

SUMMARY OF INTERNATIONAL EXPERIENCE

6.1.2 The swedish study

6.1.2.1 The method

The Swedish central bank estimated the private and social cost of cash and payment card payments. Private cost served as the premise; costs were estimated for each sector (on the basis of the payment chain participants) and the fees paid by the participants to each other were deducted. The study does not describe in detail the method of data collection, but it does note that only the published annual reports of the 3 largest companies were used in relation to the cash-in- transit companies; the cost survey of the Swedish chamber was used in relation to merchants, while a two-week phone survey was conducted with households on purchases and their method of payment (with a 57% willingness to respond). In relation to cash, the cash production and distribution costs of the central bank were estimated. Estimation covered the combined cash payment costs of banks and the post (through office, labour costs and costs relating to the use of ATM terminals, basically regarded as a fixed type of cost, and the terminal filling costs, basically regarded as a variable type of cost), the cost of the storage, processing and transport of cash, and finally, seigniorage on cash held by banks was added to these costs. (The interchange fee was deemed to be a cost only in terms of the given bank, as it only constitutes transfer between the banks within sector as a whole). The costs of households included the portion of the annual fee of the payment card allocated to cash withdrawal (on the basis of the transaction number), loss of interest incurred due to cash holding (projected to 50% of the average value of ATM cash withdrawal), the time of ATM service and the time required to access an ATM, as well as the cashier time related to cash purchases. ATM service was estimated at 50 seconds, while the combined waiting and access time was estimated at 1 minute. (Time was expressed as cost on the basis of the hourly wage after taxes.) The cashier time resulting from the time survey of the Swedish chamber was quantified as the average of after-tax and pre-tax hourly wages. In relation to retailers, the fees paid to cash-in-transit companies, additional work related to the handling of cash and the cashier time relating to cash sales was quantified. In addition to the foregoing, the costs of cash-in-transit companies and the authorisation cost relating to ATM cash withdrawals was also taken into account.

With respect to payment card payments, banks incurred the costs of authorisation, settlement, balancing, administration and the procurement of cards. Households incurred costs relating to the annual fee of the payment card distributed to card purchases and cashier times relating to payment card purchases. On the side of merchants, costs relating to POS terminals, transaction fees (merchant fees) and cashier times related to payment card sales were taken into account. The counterfeiting of cash and payment cards was regarded as a private cost, as in their view, it is a monetary transfer between the counterfeiter and the victim of counterfeiting. They hold the view that this constitutes social cost only if it modifies the behaviour of the market participants, that is, protection against counterfeiting is necessary.

6.1.2.2 results

The table below summarises the results of the estimates and calculations.83 The social cost thus calculated amounted to 0.4% of GDP.

The total cost of payment card payments was deemed to be fixed in the sense that the costs are independent of the value of transactions. In relation to cash payments, a rough estimate of the ratio of fixed and variable costs was made for each sector, resulting in 40% and 60%, respectively. It follows that the result of the two equations below was used to determine the amount where the social cost of cash and payment card payments is identical:

82 _{Bergman et al. (2007)}

The result is SEK 82, which was broken down separately into debit card and credit card purchases with the use of assumptions and data that were not detailed. The result is SEK 71 (EUR 8) for debit cards and SEK 157 (EUR 18) for credit cards as the estimated amount above which the use of the given cash saving instrument has a lower social cost.

6.1.2.3 conclusions

Upon comparison of the private costs of sectoral payment instruments with the social costs, it was established that consumers are motivated to excessively use credit cards over cash and they are under-motivated to use debit cards. By contrast, merchants are motivated in an opposite direction; banks finance cash with their profits originating from card transactions (hence they realise cross-subsidisation). The authors made the following combined proposal to improve the situation:

− introduction of a fee for ATM cash withdrawals and

− reduction of the interchange fee which would moderate the costs of acquirer banks, and the latter could promote the reduction of the merchant fee,

− the enabling surcharging for merchants if a customer pays with a card with a more expensive format.

6.1.3 The Belgian

_{and the Dutch}

_study