By Obinna Chima
Visa Incorporated has released the results of a new 2016 study conducted by Moody’s Analytics that analysed the impact of electronic payments on economic growth across 70 countries between 2011 and 2015.
The Visa-commissioned study found that increased use of electronic payment products, including credit, debit and prepaid cards, added $296B to Gross Domestic Product, while raising household consumption of goods and services by an average of 0.18 per cent per year.
In addition, Moody’s economists estimated that an equivalent to 2.6 million new jobs, were created on average per year 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,” the Chief Economist of Moody’s Analytics,” Mark Zandi noted.
“Those countries, which saw large increases in card usage also saw larger contributions to overall growth in their economies.”
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 minimise 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,” the Chief Executive Officer, Visa Incorporated, Charlie W. Scharf said.
Both emerging markets and developed countries experienced gains in consumption due to higher card usage. Increased card usage added 0.2 per cent to consumption in emerging markets, compared with 0.14 per cent in developed countries between 2011 and 2015.