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Time is Money: A Survey of the Social Cost of Payment Instruments

Author

Listed:
  • Vivien Deak

    (Magyar Nemzeti Bank)

  • Laszlo Kajdi

    (Magyar Nemzeti Bank)

  • Istvan Nemecsko

    (Magyar Nemzeti Bank)

  • Tamas Vegso

    (Magyar Nemzeti Bank)

Abstract

The number of payment transactions in Hungary has increased by almost one and a half times over ten years. The use of electronic payment instruments has grown dynamically, while only a moderate increase in cash use was observed. The analysis shows the evolution of the payments market and quantifies the social costs attached to the use of payment instruments. The value of the latter was HUF 832 billion in 2019, representing real growth of 20 per cent over 10 years, mainly due to the costs of developing the acquiring infrastructure and the significant increase in the number of transactions. The real cost per transaction has fallen by 10 per cent for cash, by one half for cards and by one sixth for credit transfers, reflecting the improved efficiency. As electronic payment is now available in most retail payment situations, the cost per transaction is expected to decrease further in the coming years as volume increases.

Suggested Citation

  • Vivien Deak & Laszlo Kajdi & Istvan Nemecsko & Tamas Vegso, 2022. "Time is Money: A Survey of the Social Cost of Payment Instruments," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(2), pages 5-36.
    • Handle: RePEc:mnb:finrev:v:21:y:2022:i:2:p:5-36
    as

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    File URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-21-2-st1-deak-kajdi-nemecsko-vegso.pdf
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    References listed on IDEAS

    as
    1. Fischer, Björn & Köhler-Ulbrich, Petra & Seitz, Franz, 2004. "The demand for euro area currencies: past, present and future," Working Paper Series 330, European Central Bank.
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    More about this item

    Keywords

    payments; payment instrument; social cost; unit cost;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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