Electronic Payments Increasing GDP in 70 Countries
According to a Visa-commissioned study, electronic payment products, including debit, prepaid and credit cards, added $296 billion to GDP from 2011 to 2015. They also raised household consumption of goods and services by 0.18% each year.
The study, conducted by Moody’s Analytics, also estimates that nearly 2.6 million jobs were created over this five-year period due to the increased use of electronic payments. The countries with the largest job increases were China (427,000 jobs added) and India (336,000 jobs).
“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation,” noted Mark Zandi, Chief Economist, Moody’s Analytics. “Those countries which saw large increases in card usage also saw larger contributions to overall growth in their economies.”
The study found that electronic payments benefited governments and contributed to a more stable and open business environment, as these payments decrease the “grey economy,” which is cash-based and often goes unreported. As a result, electronic payments provide higher potential tax revenue, lower cash handling costs, guarantee payments for merchants and provide financial inclusion for consumers.
Other key findings include:
- Increased card penetration led to a 0.4% growth of consumption.
- Countries that had the largest increase in card usage saw the largest gains. The largest GDP increases 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%).
- A 1% increase in electronic payments could produce an average increase of $104 billion in goods and services, which could translate to an average GDP increase of .04%.
”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, Visa Inc. “This research also suggests that the right public policies can create an open, competitive payment environment, and contribute to economic growth and job creation. At Visa we are partnering globally with governments, financial institutions, merchants and technology companies to develop innovative payment products and services that will accelerate electronic acceptance, grow commerce, and bring the benefits of card payments to more people everywhere.”
The 70 countries involved in the study make up 95% of the global GDP.