Increased use of electronic payment products added $296 billion to the global GDP, while raising household consumption of goods and services by an average of 0.18 per cent per year between 2011 and 2015, a report said.

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, added the Visa-commissioned study conducted by Moody's Analytics that analyzed the impact of electronic payments on economic growth across 70 countries between 2011 and 2015.

The 70 countries in the study make up almost 95 per cent of global GDP.

“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation,” said 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.”

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, Visa. “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.”
Highlights of the global study include:

•    Growth Opportunities:

Card Penetration: Real consumption grew at an average of 2.3 per cent from 2011 to 2015, of which 0.01 per cent is attributable to increased card penetration. This implies that card usage accounted for about 0.4 per cent 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 per cent), the United Arab Emirates (0.23 per cent), Chile (0.23 per cent), Ireland (0.2 per cent), Poland (0.19 per cent) and Australia (0.19 per cent). 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 Markets and Developed Countries:

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. The corresponding figures for GDP were 0.11 per cent for emerging economies and 0.08 per cent 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 per cent increase in usage of electronic payments could produce, on average, an annual increase of approximately $104 billion in the consumption of goods and services. Assuming all future factors remain the same, this could result in an annual average increase of 0.04 per cent 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. – TradeArabia News Service