The Central Bank of Iceland has published the report Cost of Retail Payment Services. The report provides information on the cost of cash, payment cards and other payment services, covering both private costs and social costs.
Annually the Central Bank collects data on service fees applied in payment services and for the use of main payment instruments in Iceland. Every two to three years, the Bank also assesses the social cost of retail payment services. The purpose of this data collection is to shed light on the cost of using different payment instruments and payment services, in order to evaluate whether certain payment methods or services are more cost-effective for society than others.
The estimated social cost of using payment instruments in Iceland amounted to approximately 54 b.kr. at 2023 price levels, or about 1.25% of gross domestic product, and decreased since 2021. Social cost includes the cost of inputs and labour related to payment services. Examples of social costs include investments in payment systems, issuance of cash, wages for employees handling payments, insurance, safes, losses due to fraud and the time it takes to use a given payment instrument or service.
The cost of households increased year-on-year. It is estimated that households in Iceland paid around 14.4 b.kr. in direct service fees in 2023. Indirect service fees amounted to approximately 17.5 b.kr., which refers to fees merchants pay directly to acquiring institutions due to card usage.