Cash is a quick and cheap means of payment in the German retail trade sector. On average, cash payments take just over 22 seconds and cost around 24 cent per transaction, according to a study on the costs of cash payments in the retail trade sector which the Deutsche Bundesbank carried out in cooperation with EHI Retail Institute.

Johannes Beermann, the Bundesbank Executive Board member responsible for cash management, commented that “cash is still the quickest and most cost effective form of payment at the point of sale”. The study found that cash payments are roughly seven seconds quicker than card and PIN payments and no less than 16 seconds faster than card and signature payments.

In terms of costs, cash payments and girocard payments do not differ by much. The study singles out cash payments of up to €50, which it found to be cheaper on account of the lower average fixed costs of cash payments. Girocard payments prove to be most cost effective for higher payment amounts.

The German retail trade sector processes roughly 20 billion transactions per year. “Three out of four payments at the point of sale are settled in cash,” Mr Beermann explained. However, the number of cashless payments is steadily on the rise.

Study approach

The study measured the duration of a total of 3,125 payment transactions at 15 retailers in 2017. Furthermore, 30 retailers of varying sizes from a variety of sectors provided data on their costs for cash and card payments. The costs of cash payments were subsequently compared with those of the most common cashless payment methods (girocard, credit card and SEPA direct debit).

Simulations to capture contactless payment transactions

Contactless payments have only recently begun to gain importance in Germany. For this reason, the data survey measured only a small number of contactless card payments. The study captured this new form of payment using simulations.

If all the card and PIN payments transacted so far were settled as contactless transactions and if payments for amounts of less than €25 did not need to be authorised, cash would still have the lowest costs per transaction.

The speed of contactless payments makes their variable costs particularly low. This explains why contactless girocard payments result in the lowest costs as a share of turnover, followed by electronic direct debit, contactless credit card payments, cash payments, and credit card and signature payments.