Visa Inc. released Saturday the results of a new 2016 study conducted by Moody’s Analytics that analysed 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 $296bn to GDP, while raising household consumption of goods and services by an average of 0.18% per year.
Moody’s economists estimate that the equivalent of 2.6m 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. Notably, the two countries with the greatest average job increases were China (427,000 jobs) and India (336,000 jobs).
In Egypt, increased electronic payment usage added $10m to the country’s GDP from 2011 to 2015 and created the equivalent of an average of 2,300 jobs in Egypt per year throughout the same period.
“Electronic payments are a major contributor to consumption, increased production, economic growth, and employment creation,” noted Chief Economist at Moody’s Analytics Mark Zandi. “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, entitled “The Impact of Electronic Payments on Economic Growth”, which also indicated that the mechanisation of payments benefited governments and contributed to a more stable and open business environment.
Accordingly to the study, real consumption grew at an average of 2.3% from 2011 to 2015, of which 0.01% is attributed to increased card penetration.
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.
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 $104bn in the consumption of goods and services.
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, that countries encourage further mechanisation of payments, promote policies that minimise unneeded regulation, create a robust financial infrastructure, which will lead to greater consumption.
Due to somewhat lower penetration in the Middle East compared to the other regions studied, card usage added 0.09% to GDP in the Middle East.
The UAE recorded a 0.23% increase in GDP due to increased card usage during the five-year period studied; increased electronic payment usage added $3.7bn to the UAE’s GDP.