The total cost of handling physical cash in the German economy has been estimated at EUR12.5 billion per year, by a team of academics in Berlin.
The study, conducted by the Research Center for Financial Services at Steinbeis University, found that each German citizen pays around EUR150 per year to keep the cash system running.
Cash costs add up throughout the whole cash cycle: from production costs, transportation costs, insurance costs, cash handling, security and through to losses of interest. With EUR6.7 billion, the largest burden is carried by merchants, followed by banks with EUR4.5 billion.
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The study explores a number of ways countries can reduce cash payments including implementation of limits for cash transaction amounts that exceed a specific level and banning/ limiting cash payments for cigarettes and other cash-based vending machines.
The report's author Professor Jens Kleine says: "In order to reduce the cost of the payment system, individuals need to understand the real costs of the different payment methods."