Study Concludes that Debit and Credit Card Usage Boosted Gross Domestic Product (GDP) in Australia, and Global GDP by $983 Billion between 2008 and 2012.
Sydney, Australia – February 11, 2013 – The growth in the use of electronic payment products, such as credit and debit cards, added nearly US$21 billion (AU$20.2 billion) to the Gross Domestic Product (GDP) of Australia, according to a study conducted for Visa by Moody’s Analytics, a leading independent provider of economic forecasting.
The study of 56 countries, including Australia, that represent 93 percent of global GDP, concluded that: “card usage makes the economy more efficient, yielding a meaningful boost to economic growth”.
Globally, electronic payments contributed $983 billion to the GDP of the 56 countries examined between 2008 and 2012. Over the same time period, GDP in those countries grew by an average of 1.8 percentage points.
“With growing card usage contributing 0.47 percent, or nearly US$21 billion to Australia’s GDP, there’s no denying the benefits of electronic payments here, nor the importance of maintaining an open marketplace to encourage competition and innovation within the industry. We can see from the data that the positive impact in economic growth is a direct result of card usage and is tied to the benefits electronic payments offer, including enhanced security, convenience of operating without cash or cheques, increased efficiency at checkout and a reduction in the grey economy,” said Vipin Kalra, Visa country manager for Australia.
Vipin continued: “We are excited about the prospects of increasing electronic payments in Australia through new, innovative solutions, and we look forward to working with local businesses, governments and industry stakeholders to continue to expand and support local economic growth.”
“Despite a challenging global economic landscape, the increasing penetration of payment cards helped increase consumer consumption and on average, added to GDP,” noted Mark Zandi, Chief Economist of Moody’s Analytics. “The increase in consumption parallels the growing popularity and accessibility of electronic payments among global consumers. At the same time these findings point to the need for governments to adopt policies that encourage the shift to efficient and secure electronic forms of payments.”
Highlights of the study include:o Regional Economic Growth: Across Asia Pacific, the adoption of electronic payments increased GDP. In China, GDP rose by nearly US$375 billion. In Japan, it rose by US$25 billion. India, increased card usage contributed US$2 billion to the country’s GDP.
o Value of Electronic 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. The advent of credit and debit cards has greatly aided consumers’ ability to optimize consumption decisions by giving them secure and immediate access to all of their funds on deposit or a line of credit. 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 and mobile payment methods would not be possible without global electronic payment systems which allow the safe and easy transfer of funds and guaranteed payment to merchants.
o Supporting Government: Electronic payments lead to a reduction in the gray economy by increasing transparency and generating additional tax revenue.
o Impact of Future Card Growth: Moody’s Analytics found that a one percent increase in card usage across the 56 countries in the study produces an annual increase of 0.056 percent in consumption. Given recent card penetration growth rates and the additive effects calculated on future GDP, Moody’s Analytics estimates a meaningful 0.25 percent addition to consumption and 0.16 percent additional GDP.
o Card Growth Boosts Recovery: From 2008 to 2012, global real GDP was only 1.8 percent per annum. Without increased card usage, that growth would have been 1.6 percent. Card penetration and usage provided an important boost to economies, helping to mitigate what would otherwise have been an even slower recovery from the global recession.
This survey is the second iteration, following a study conducted by Moody’s Analytics from 2003 to 2008.
The study and an accompanying white paper can be found here.
Contact:Andrew CraigVisa Inc.firstname.lastname@example.org
About Visa Inc.: Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world’s most advanced processing networks—VisaNet—that is capable of handling more than 24,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit corporate.visa.com Corporate