in favour of more expensive solutions. in denmark, merchants charge a fee to customers who use a credit card. a similar practice in norway could keep down payment costs. the profit banks earn on the use of international payment cards is higher than on bankaxept. it is therefore likely that, in isolation, it is in the interest of many banks for customers to choose international payment cards. new european regulations that will set a cap on the fees issuers of payment cards can charge are in the pipeline. this will likely weaken banks ’ incentive to promote international payment cards. banks continue to lose money on payment services. the cost survey we are presenting today does show that banks ’ cost coverage has increased somewhat over time. but income still amounts to only 76 percent of the costs associated with payment services. banks lose money on all main types of payment instruments, except for international cards. the losses must be covered by income from other banking activities. pricing that does not cover costs may be a conscious choice by banks. some customers may believe that they should not have to pay for using their own money. at the same time, mispricing and losses weaken banks ’ ability and willingness to promote efficient solutions and invest in new infrastructure. that is not a forward - looking approach. we must invest now to ensure efficient and secure payments also in the future. the establishment of the company bankaxept as is promising in this regard. norges bank will closely follow developments and continue to publish information on costs, prices and market conditions. contactless payments are making their way into the norwegian payments market. contactless payment allows customers to make a payment by holding a mobile phone or a card over a terminal without entering a pin. 4 while this is a new means of payment, the underlying payment solution is not new. the solutions are often based on the use of credit cards, with a low price for users. if contactless payments based on credit cards supplant payments with bankaxept, the social costs of payment services may rise. norges bank has noted that the new owner company of bankaxept is considering developing a solution for contactless payments. this may bolster competition and help to lower costs of this type of payment too. efficiency is more than low costs. payment services have become faster and more userfriendly in recent years. for example, there has been an increase from two to four daily clearings and settlements. contactless payments make small payments faster. soon, online bank transfers will also

vis the other banks. the result of this clearing is sent four times a day to nbo. there the balances of banks ’ accounts with norges bank are adjusted. when the banks have been notified that the settlement in norges bank is in order, the banks adjust their customers ’ accounts. all the large banks participate in these settlements. dnb and sparebank 1 smn also participate in the settlement in norges bank on behalf of smaller banks. today, norges bank has published a new survey of payment costs using data from 2013. the overall social costs of using cash, payment cards and giro payments amount to just under nok 15 billion, 3 or 0. 6 percent of mainland gdp. the estimate includes the costs for both providers and users of payment services. these costs have declined since they were last estimated in 2007. compared with other countries, the costs of the norwegian payment system are low. this is a benefit to customers and represents a comparative advantage for the norwegian business sector. there are several reasons why payment costs are low in norway. new technology resulted in an early introduction in norway of cost - efficient electronic systems. banks led with new solutions, and the public adopted them quickly. banks have collaborated on both the establishment and the operation of new services. the resulting economies of scale made it possible to keep costs low. norwegian and nordic banks are at the forefront of developments in this area. norway is among the world leaders in the use of payment cards. eight out of ten card transactions take place using bankaxept, one of the solutions that banks have developed. according to norges bank ’ s estimates, the social cost of using bankaxept is around nok 3 per payment. by comparison, payments using international payment cards cost society nok 13, or four times as much. credit card use is increasing. it is the point of sale, typically a shop, which pays the costs connected with use, and not the cardholder. while the merchant pays around nok 0. 10 when the customer uses bankaxept, the merchant must usually pay between 1 and see norges bank papers 5 / 2014. bis central bankers ’ speeches 2 percent of the purchase amount when the customer chooses visa or mastercard. merchants are free to pass on this cost to card users, but this seldom happens in norway. customers are thus not charged correct prices when given a choice of payment solution. the result can be that an inexpensive solution – bankaxept – is supplanted