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Electronic payments are not only in style with consumers and retailers, they have also had a profound impact on the global economy, according to a new study by Visa, showing that credit, debit and payment card use has boosted economic growth in over 70 countries over the past four years.
The payment trend has also increased the amount of money people are spending by an average of 0.18 percent per year. This may not seem like a big deal, but when you do the math it has added $296 billion to the GDP.
The Impact of Electronic Payments on Economic Growth study was conducted by Moody's Analytics and looked at the the impact electronic payments has had on economic growth. While they found that spending is up, electronic payments have also sparked an upswing in hiring, with Moody's economists suggesting that 2.6 million new jobs were generated from 2011 to 2015.
“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation,” noted Mark Zandi, Chief Economist, Moody’s Analytics. “Those countries which saw large increases in card usage also saw larger contributions to overall growth in their economies.”
As you may have expected, China and India saw the most growth, which was linked to both use of payment cards and productivity.
Credit and debit cards are good for governments
Along with electronic payments helping to increase revenue and hiring, the study also found that they have been a bonus for governments, by creating a business environment that is more stable and transparent.
They also assisted with reducing what they call the Grey economy, which basically means cash-based transactions that go unreported. This more above-board revenue stream gives governments access to more taxable funds, while also ensuring that merchants are paid.
” These findings reinforce the many positive benefits that electronic payments bring to local economies all over the world,” said Charlie W. Scharf, Chief Executive Officer, Visa Inc.
In keeping with this theme, countries that had the most growth in credit card usage saw the most growth elsewhere, as well. With large increases in GDP reported in:
• Hungary (0.25%)
• the United Arab Emirates (0.23%)
• Chile (0.23%)
• Ireland (0.2%)
• Poland (0.19%)
• Australia (0.19%)