Visa-Commissioned Study Estimates Migration to Electronic Payments Added Nearly $300B to GDP Across 70 Countries
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In addition, Moody’s economists estimate that the equivalent to 2.6 million new jobs were created on average, annually, over the five-year period as a result of increased use of electronic payments. The 70 countries in the study make up almost 95 percent of global GDP.
“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation,” noted
Findings from the study were shared in the report, “The Impact of Electronic Payments on Economic Growth,” which also indicated that the electronification of payments benefited governments and contributed to a more stable and open business environment. Additionally electronic payments helped to minimize what is commonly referred to as the grey economy -- economic activity that is often cash-based and goes unreported. As a result, electronic payments provided a higher potential tax revenue base for governments, while also bringing the added benefits of lower cash handling costs, guaranteed payment to merchants and greater financial inclusion for consumers.
”These findings reinforce the many positive benefits that electronic payments bring to local economies all over the world,” said Charlie W. Scharf, Chief Executive Officer,
Highlights of the global study include:
- Growth Opportunities:
Card Penetration: Real consumption grew at an average of 2.3 percent from 2011 to 2015, of which 0.01 percent is attributable to increased card penetration. This implies that card usage accounted for about 0.4 percent of growth in consumption. Since consumption growth is, on average, faster in emerging economies, those countries also have more to gain by increasing card usage.
Card Usage: Countries with the largest increases in card usage experienced the biggest contributions in growth. For example, big increases in GDP were recorded in
Hungary(0.25%), the United Arab Emirates(0.23%), Chile(0.23%), Ireland(0.2%), Poland(0.19%) and Australia(0.19%). In most countries, card usage increased regardless of economic performance.
- Contribution to Employment:
Increased card usage added the equivalent to almost 2.6 million jobs on average, per year, across the 70 countries sampled between 2011 and 2015. Notably, the two countries with the greatest average job increases were
China(427,000 jobs added) and India(336,000 jobs added), which both had large gains in employment due to the combination of fast growing labor productivity and increased card usage. Emerging Marketsand Developed Countries:
Both emerging markets and developed countries experienced gains in consumption due to higher card usage. Increased card usage added 0.2 percent to consumption in emerging markets, compared with 0.14 percent in developed countries between 2011 and 2015. The corresponding figures for GDP were 0.11 percent for emerging economies and 0.08 percent for developed countries, and suggests that all markets, regardless of current card penetration rates, can benefit from increases in consumption due to increases in card usage.
- Potential Future Growth:
Across the 70 countries in the study, Moody’s found that every 1 percent increase in usage of electronic payments could produce, on average, an annual increase of approximately
$104 billionin the consumption of goods and services. Assuming all future factors remain the same, this could result in an annual average increase of 0.04 percent to GDP attributable to card usage.
The study highlights that expanding electronic payments alone will not necessarily increase a country’s prosperity -- it requires the support of a well-developed financial system and healthy economy to have the greatest impact. The report recommends at a macro-level, to encourage the further electronification of payments, countries must promote policies that minimize unneeded regulation, create a robust financial infrastructure, and lead to greater consumption.
The study and additional materials can be found on www.visa.com/moodysanalytics
Jennifer Morris, 202-760-0145