A new study has found the increased use of electronic payment products, including credit, debit and prepaid cards, added $296B to GDP, while raising household consumption of goods and services by an average of 0.18% per year.
The Visa 2016 study of 70 countries, conducted by Moody’s Analytics, also found real consumption grew at an average of 2.3% from 2011 to 2015, of which 0.01% is attributable to increased card penetration. This implies that card usage accounted for about 0.4% of growth in consumption.
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% of global GDP.
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.
Additionally the Visa study found 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.
Both emerging markets and developed countries experienced gains in consumption due to higher card usage. Increased card usage added 0.2% to consumption in emerging markets, compared with 0.14% in developed countries between 2011 and 2015. The corresponding figures for GDP were 0.11% for emerging economies and 0.08% 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.
Across the 70 countries in the study, Moody’s found that every 1% 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% to GDP attributable to card usage.
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