Visa Inc. today released the results of a new 2016 study conducted by Moody’s Analytics that analyzed 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 US$296B to GDP, while raising household consumption of goods and services by an average of 0.18 percent per year.
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 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 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.”
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
- 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 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
- 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
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 percent to GDP attributable to card usage.