But the educational level of the consumer and above all his or her age, does have a substantial effect on the result. A 60-year old consumer will only choose a card over cash when making a purchase of, on average, SEK 179, while a 20-year old consumer would choose to pay by card for a transaction as low as SEK 60. It would appear that young people’s choice is fairly close to a cost-efficient choice from society’s point of view. The study is based on data from 2002, but there is nothing to indicate that consumers’ methods of payment have changed radically since then, although cards have continued to grow in importance. Use of cash is still at a high level in Sweden. The cost of cash management has probably risen more than the cost of card management, calculated per transaction. The costs for increasing security for cash-in-transit and ATMs have been substantial. There are many indications that the gap in socioeconomic costs between cards and cash has widened further and that the cut-off point will therefore occur at an amount lower than SEK 70. In this case, society would benefit even more from a reduction in the use of cash. Make the costs visible An important basic insight is that the costs of different types of payment exist, even if they are not visible. They affect the consumers in that goods and services become more expensive. If these choose less efficient instruments of payment to a greater extent, then the price increases will be greater.
9  The average consumer was defined was a 41-year old man with upper secondary school education and an annual income of SEK 350,000-400,000 and who lives in a two-person household. 4  BIS Review 68/2008  they charge the retail trade. 10 In the long term this would benefit us consumers in the form of lower goods and services prices. Perhaps the retail trade could also discuss charging a fee of those of us who insist on using the most expensive credit cards – that is where the hidden cost of the payment is highest. Charges on ATM withdrawals have been a hot political topic in Sweden. Should we have to pay to take out our own money from our own accounts? But isn't it time to defuse the question of ATM charges? It costs money to manage cash. And isn’t it better that we can see the costs than that we pay a hidden price in some other way at the bank or the supermarket? 10  According to an earlier study made by the Riksbank, the loss made by an average major bank in 2002 in connection with cash management was approximately equal to the profit it made on the card market. There is evidently some subsidising between the card and cash markets. See Guibourg and Segendorf (2007). BIS Review 68/2008  5