The use of debit and credit cards boosted the global economy to the tune of $983 billion between 2008 and 2012, according to a Visa-sponsored study by economic forecasting firm Moody’s Analytics.
Electronic payments sped up economic recovery in the wake of the recession, according to survey. The use of cards also increased consumption in emerging markets by making payment methods more accessible.
Research looked at the Gross Domestic Product (GDP) of 56 countries over a four-year period and found that card usage was the equivalent of adding 1.9 million jobs to the global economy.
The 56 countries surveyed represent 93% of the global GDP. Among them, China stood out as adding the most revenue to the economy due to electronic payments. Of the total $983 billion added to the GDP though the use of cards, a whopping $375 billion came from China. The U.S. contributed $127 billion to the total. The top ten countries were:
- China – $375 billion
- United States – $127 billion
- United Kingdom – $68 billion
- France – $53 billion
- Brazil – $51 billion
- Russia – $36 billion
- Japan – $25 billion
- South Korea – $23 billion
- Australia – $21 billion
- Germany – $16 billion
Benefits of electronic payments
Consumers aren’t the only ones who find using credit and debit cards convenient. Retailers also benefit from electronic payments. The study found that there were three major factors behind the popularity of using credit and debit cards:
- Convenience and peace of mind for both consumers and merchants – debit and credit cards provide customers with ready access to all their available lines of credit and funds, while giving merchants the assurance of guaranteed payments.
- Security – consumers who pay with electronic methods are protected in case of fraud and have recourse if their accounts are compromised.
- Less paper, more transparency, increased tax revenue – the so-called “gray economy” – the distribution of goods through unofficial or informal channels – is reduced when electronic payments are utilized, increasing tax revenues. At the same time, fewer paper transactions reduce costs for banks.
Moody’s says there is an increase of .056% in consumption each year due to the 1% increase in card usage across all countries in the study and predicts .25% higher consumption and a .16% rise in the GDP as a result of recent card penetration rates.
Overall, the study supports the idea that changing over to electronic payments can only increase economic efficiency and global economic growth because of convenience for consumers, easier payment processing for merchants, and more tax revenue for governments.