Cards or cash. How should we pay?

Date 23/10/2012

In this article, Björn Segendorf and Thomas Jansson investigate the efficiency of the Swedish payment system. They show that the use of cash or debit and credit cards in Sweden is relatively efficient. However, the authors' assessment is that Swedish consumers use cash more often than is socially optimal. There may therefore be good reasons to encourage consumers to use debit cards to a greater extent. One way to do this is introduce transparent and cost-based fees for different types of payment. It may be necessary to compensate the consumers in order to make it easier for them to accept such fees, for example by offering better interest rates on current accounts or lower prices in the shops. It may also be necessary to complement such fees with simple and targeted information.

 

The article is included in this year's third issue of the Sveriges Riksbank Economic Review, which was published on 17 October.