The 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% per year.
The 2016 study conducted by Moody’s Analytics for found 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 or markets in the study make up almost 95 percent of global GDP.
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.
Highlights of the global study include:
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 or markets 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.
Increased card among 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 and markets in the study, Moody’s found that every 1% increase in usage of electronic payments could produce, on average, an annual increase of approximately US$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.
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.
Hong Kong is among the highest user of cards across the 70 countries studied. Asian countries experienced an average GDP increase of 0.06% resulting from increased card usage. Within this region, Thailand (0.19%), Vietnam (0.14%), and Singapore (0.1%) experienced the largest weighted average increase in GDP due to increased card usage. One possible explanation for the increased card usage is the greater internet availability across these Southeast Asian countries, since easily accessible internet gives consumers the possibility to both learn about and access different forms of electronic payments.
From 2011 to 2015, increased electronic payment usage added to each of the market’s economy below in Greater China region.
Hong Kong: US$920,000,000
Mainland China: US$17,790,000,000
Countries with the largest number of job gains per year were also the largest countries. 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 because of the combination of fast growing labor productivity and increasing card usage.
Led by these emerging markets, the emerging markets group averaged a greater number of jobs added per year (43,600) than did developed countries (14,800). Between 2011 and 2015, increased electronic payment usage created the equivalent to an average of jobs below per year in Greater China region.
Hong Kong: 3,290 jobs
Mainland China: 427,000 jobs
Taiwan: 9,980 jobs
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