Study: Retail Payments Costs and Savings in Kosovo


The Central Bank of the Republic of Kosovo (CBK) has conducted the following study, with the support of World Bank under the Remittances and Payments Program, financed by the Swiss State Secretariat for Economic Affairs (SECO Remittances and Payments Program – RPP).

The report is based on the methodology developed by the World Bank’s Payment Systems Development Group - PSDG (A Practical Guide for Measuring Retail Payments Costs), which has been performed by the PSDG in several other countries as well, which has resulted effective in the endeavours to reduce the usage of cash and to identify the possibilities for reduction of costs borne by the usage of payment instruments for the economy.

The study is based on the data from the survey through the questionnaires administered within a chosen sample of households and businesses for the demand side, and with the CBK, commercial banks and NBFI-s operating in Kosovo, from the supply side. It presents an assessment of financial and non-financial costs (costs of time spend for the execution of payments converted into financial terms according to the respective methodology) of different payment instruments, which can be used for the better orientation of development activities and reforms in the field of payments, towards changes with higher impact for the increase of efficiency of payment services.

Efficiency gains resulting from migration to lower-cost retail payment instruments and more efficient use of those instruments could have signifi¬cant benefi¬ts for economic development and growth as the transaction costs of exchanging goods and services are reduced. Lower costs of retail payments can also fundamentally extend the access of electronic payment services to lower-income households and micro and small businesses, by further improving the efficiency of the national payments system as access to modern payment instruments is broadened.

Beyond the identification of high costs borne by the usage of cash for the Economy of the country in general, including costs for the users and the providers of payment services (about 2.7% of GDP), this study aims to present the main cost categories for each of the economic actors, and the possible savings through the replacement of cash payments and other forms of physical payments (paper based credit transfers) with electronic payments (cards, electronic credit transfers).

Retail Payments Costs and Savings in Kosovo