Payments are efficient if it costs relatively little for society as a whole to implement them. Society’s costs include the payment intermediary's costs, such as costs for technical equipment, insurance, transportation and so on, but also other costs such as waiting times for an individual customer. The most recent investigation of society's costs for different types of payment in Sweden was published quite long ago, in 2012. According to that investigation, payments by debit card and direct debit were most cost-effective. For example, the overall economic cost for a payment using a debit card was about four kronor. The cost for each cash payment was twice as high, about eight kronor. Payments by credit card or credit transfer were the least cost-effective solutions. Here, the economic cost per payment was over ten kronor.
There are many indications that society’s cost per payment in Sweden has fallen since then. For example, the payment solution Swish, in which account-to-account transfers are initiated by mobile telephone, has emerged to take over from cash payments. According to a more recent Danish study, the economic costs of the Danish equivalent to Swish are about two kronor per payment (person-to-person) and it seems reasonable to believe that something similar would also be true of Sweden. At the same time, the proportion of payments made using debit cards and credit transfers has increased. Given the cost calculations described above, this indicates that the average economic cost per payment in Sweden has fallen.
However, the cost per payment using a certain payment instrument also depends on how many payments are made with that instrument. This is because large, fixed costs are often linked to each payment instrument. These large, fixed costs make each payment cheaper when the number of payments increases. This is an important reason for why the cost of paying with a debit card is significantly lower than the cost per payment of a credit card. In Sweden, significantly more payments are made with debit cards than with credit cards.
This effect also suggests that the costs for cash payments may have increased. When we make fewer cash payments at the same time as the largest part of the infrastructure remains, the average economic cost per cash payment increases. For electronic payments, we may have had the opposite effect, as the number has increased. A new cost study for Sweden would be necessary to give a more definitive answer to whether payments in Sweden in total have become more cost-effective. The Riksbank plans to conduct such a study next year with the aim of presenting the results in 2021.
Compared with other countries, payments in Sweden seem cost-effective. Cash usage is higher abroad, at the same time as more efficient electronic payment methods resembling Swish are used to a lower extent. According to a study from the ECB, published at the same time as the Swedish study, the cost per payment in Sweden was significantly lower than the cost in most other European countries.
Even if the cost of each payment has fallen, and even if the cost efficiency of Swedish payments is high compared with other countries, there is room for further streamlining. Among other things, greater availability and capacity in the systems for instant payments could contribute to increased competitiveness and innovation – see The Riksbank is adapting to the digital world.
For a market to function efficiently, it is also important that the prices and fees paid by those using the payment services reflect the actual costs of a payment. Among other things, the planned cost study for Sweden must produce an overview of the costs for different payments and thereby create a better basis for assessing how well pricing is functioning.