Visa might be a suspicious source to reveal that electronic payments stimulate economic growth, but a new study commission by the payments giant has revealed just that. The growth in the use of electronic payment products, such as credit and debit cards, added $983 billion to the Gross Domestic Product of the 56 countries examined between 2008 and 2012, according to the study conducted for Visa by Moody’s Analytics.
The study of 56 countries that represent 93% of global GDP concluded that: “Card usage makes the economy more efficient, yielding a meaningful boost to economic growth, year after year, through a multitude of factors including transaction efficiencies, consumer access to credit and consumer confidence in the payment system overall.”
“Despite a challenging global economic landscape, the increased penetration of payment cards helped boost consumer consumption and, on average, added to GDP,” noted Mark Zandi, Chief Economist of Moody’s Analytics. “This was particularly true for emerging markets. The increase in consumption parallels the growing popularity and accessibility of electronic payments among global consumers, and the findings point to the need for governments to adopt policies that encourage the shift to efficient and secure electronic forms of payments.”
The study concluded that increased credit and debit card usage contributes to economic activity by reducing transaction costs and improving efficiency in the flow of goods and services. Merchants also benefit because there is less cash and check handling in the system, eliminating the burdens and risks associated with holding cash. In addition, the dramatic growth of ecommerce would not be possible without global electronic payment systems, which allow the safe and easy transfer of funds from consumers to merchants.
According to the report, from 2008 to 2012 global real GDP was only 1.8% per annum. Without increased card usage, that growth would have been just 1.6%.