Have you ever wondered why you are charged an additional fee when you want to use your card to pay for your morning coffee? The choice of how we pay for our daily items has a dramatic effect on how much your vendor takes home at the end of the day. Think of it this way. You go into your local café, say “hi” to Norm standing behind the machine and order your triple espresso (just enough caffeine to get your through to morning tea). You pull out your wallet to pay for this little bit of happiness. Do you choose cash card or credit? Maybe you can even pay on your phone.

Malcolm Edey’s address to the Australian Financial Review Retail Summit on Wednesday 28 September 2016 highlights the increasing dependence of non-cash transactions in day-to-day activities. Overwhelmingly, non-cash payment methods are far cheaper than the alternative of cheque payments, which exceed $5.00. However, this cost, which falls on the burden of the business owner, is still a significant portion of the transaction cost. Particularly if these transactions are small sums. The cost varies depending on the method uses (see figure attached).

As we move forward to an age where cash becomes a less frequent method of payment, we should be mindful of the burden our small businesses bare. While businesses usually absorb this cost in the short term, over the long run these costs translate into inflationary pressures on the goods we consume.