Paying with cash or a debit card is the cheapest payment method for consumers in Germany. Cash incurs the lowest costs per payment transaction, while debit cards are cheapest in relation to the amount of money spent. Paying with a credit card is in any case considerably more expensive. These are the conclusions drawn by a study entitled “Costs of cash and card payments from a consumer perspective”, which was carried out on behalf of the Deutsche Bundesbank. Consumers in Germany do not see much difference between the costs of using cash or a debit card, explains Bundesbank Executive Board member Burkhard Balz. In terms of costs, cash can therefore certainly hold its own in relation to digital means of payments.

For the first time, costs arising from the disclosure of personal data were also recorded, with Mr Balz noting that the study reveals the relatively high costs associated with disclosing data when making non-cash payments. By contrast, using cash does not lead to any data disclosure costs. This underscores how sensible it is for the digital euro to be created as a low-data alternative to existing digital payment methods.

The study is based on a 2023 representative survey of more than 2,000 people carried out by the market research institute Forsa about the costs of using cash, debit cards and credit cards. The survey asked about fees for account management, ATM cash withdrawals and payment cards, as well as the financial impact in the case of loss or fraud. Added to this are costs in the form of the time spent dealing with payment methods, say for withdrawing cash or checking account statements, as well as the costs of data disclosure. 

With tech companies entering the payments space, business models based on the commercial use of customer data could become more prevalent. Tech companies often provide their services free of charge and make use of their customers’ data, for example for personalised advertising. People are therefore paying with their data. These costs have rarely been considered to date, but are gaining in importance with advancing digitalisation. 

The study uses two methods to measure the costs of data disclosure for cashless payments. The first method involves asking participants how much they would be prepared to pay for the immediate deletion of all the payment data recorded when making a card purchase. Around 42 % of respondents would be prepared to pay €0.50 for immediate deletion, 28 % would pay €1 and 12 % would pay as much as €3. The second method involves looking at how companies gauge the benefits of the obtained data. One way of doing this is to examine reward programmes and the associated discounts that customers receive for disclosing their personal data. Taking the average of these two approaches, the costs amount to €0.43 for each card transaction or 0.86 % of the card turnover.

The study also quantifies the benefits of cash for consumers. To this end, the survey asked consumers how much money they would be prepared to pay in order to be able to use cash. Around half of respondents were already prepared to pay using a card rather than cash in return for a price reduction of €0.50. However, as many as 26 % said they would be unwilling to switch away from cash even for a price reduction of €3. The survey also asked if people would be willing to accept a payment to switch to a bank account with no cash withdrawal facility. Such a cashless account would be unappealing to 72 % of respondents even if they were paid up to €20 per month in return. Most people therefore do not wish to do without cash.

Despite our best efforts to be objective in our study it is clear that the perceived costs and benefits of paying are individual and vary from person to person, explains Mr Balz. In the Bundesbank and in the Eurosystem we are therefore explicitly committed to ensuring that there is freedom of choice when it comes to making payments: everyone should be able to pay the way they want to.