Cost savings due to increase in debit card payments and technological developments
In recent years, banks and retailers have been encouraging the use of debit card payments, since earlier DNB research in 2002 had shown that debit card usage was more cost-efficient than cash payment. From that time, they agreed to promote debit card payments by increasing the number of debit card terminals and by public awareness campaigns encouraging customers to use debit cards for small amounts as well. These actions turned out to be very effective. Since the start, consumers have increasingly been using debit cards for their purchases while the use of cash money rapidly declined. As a result, cash payments in 2009 cost far less to market parties and debit card payments cost only slightly more than in 2002. In addition, technological developments, such as faster and cheaper Internet, have led to cost savings. For cash and debit card payments together this resulted in savings of 9% in 2009, which amounts to EUR 237 million compared to 2002. In 2009, debit card payments cost society 32 euro cents on average, while cash payments on average cost 39 euro cents.
Low debit card tariffs for Dutch retailers contribute to high debit card acceptance
The payment costs for retailers consist of costs they incur themselves, their share in the social costs and the fees and tariffs they pay to third parties, such as security transport companies and banks. In the Netherlands and the rest of the EU alike, the fees and tariffs paid to third parties for cash money form a smaller part of total costs for retailers than those paid for debit card payments. The debit card tariffs for Dutch retailers, however, represent a much smaller part of total costs than the EU average (Chart 2). The low tariffs for debit card payments is one of the most important reasons for the high debit card use in the Netherlands compared to other EU countries. The low debit card tariffs make it attractive for Dutch retailers to accept debit card payments, because they, too, save costs if their customers pay by debit card instead of cash. This shows that lower banking debit card tariffs for retailers in the EU could contribute to a more efficient European payment system. After all, the number of retailers accepting debit card payments will increase and European consumers will be more inclined to use debit cards to pay for their purchases than cash. The large economies of scale for debit card payments could lead to a reduction in costs for the European payment system as a whole.