Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173379
Authors: 
Kosse, Anneke
Chen, Heng
Felt, Marie-Hélène
Jiongo, Valéry Dongmo
Nield, Kerry
Welte, Angelika
Year of Publication: 
2017
Series/Report no.: 
Bank of Canada Staff Discussion Paper 2017-4
Abstract: 
This study provides insight into the costs of cash, debit card and credit card payments made at the point of sale in Canada in 2014. For each payment method, it examines the total resource costs, which capture the overall use of resources by society as a whole. Using extensive survey data from retailers, financial institutions and cash transportation companies as well as internal and external data sources, the results show that the resource costs of payments in Canada are non-negligible (0.78 per cent of GDP). Credit cards are most costly in terms of resource costs per transaction, while cash carries the highest resource costs per dollar transacted. Debit cards are the least costly, both in terms of costs per transaction and costs per dollar in sales. The study also demonstrates how the costs vary with transaction sizes. Considering the variable resource costs only, cash is found to be cheapest for transactions up to $6, while debit cards are the least costly for transactions larger than $6. The study also looks into the total private costs, which are the costs incurred by each stakeholder, thereby providing insight into how costs are affecting the use and acceptance of payment methods.
Subjects: 
Bank notes
Financial institutions
Payment clearing and settlement systems
JEL: 
D12
D23
D24
E41
E42
G21
L2
Document Type: 
Working Paper
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