Resource costs of Australian payments system down as percentage of GDP

The "resource costs" of Australia's payments system have fallen as a percentage of GDP since 2006, according to a Reserve Bank of Australia working paper.

The evolution of payment costs in Australia by Chris Stewart, Iris Chan, Crystal Ossolinski, David Halperin and Paul Ryan examines the costs borne by financial institutions, merchants and consumers in making, facilitating and accepting consumer-to-business payments.

The results also indicate that the relationship between resource and private costs varies significantly across payment instruments, with the greater share of the overall cost being borne by merchants.

"The consumer undertaking a transaction typically pays a small proportion of its cost," according to the authors. Consumers also face a similar cost for credit card payments as for debit card payments despite the higher cost of credit cards to the economy, while small businesses incur higher costs than large merchants.