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Publicly Available Published by De Gruyter June 1, 2003

What Does it Cost to Make a Payment?

  • David Humphrey , Magnus Willesson , Ted Lindblom and Göran Bergendahl

We survey the limited data that exists concerning the cost of making/receiving a payment by banks, retailers, and other parties to a transaction. Since an electronic payment costs between one-third and onehalf that of a paper-based instrument, a country may save 1% of its GDP annually as it shifts from a fully paper-based to a fully electronic-based payment system. Some gains have already been realized. Additional analysis indicates that bank costs of making a payment may have fallen by 45% in Europe as the share of electronic transactions in 12 countries rose from .43 to .79 over 1987-1999.

Published Online: 2003-6-1

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