The growth in the use of electronic payment products, such as credit and debit cards, added $983 billion to the Gross Domestic Product (GDP) of 56 countries between 2008 and 2012, according to a study conducted for Visa by Moody’s Analytics.
Increases in card consumption contributed to an average additional growth in GDP of 0.17 percentage point per year over the five-year period, the study found. Over the same time period, GDP in those countries grew by an average of 1.8 percentage points.
“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.”
Charlie W. Scharf (CEO, Visa): Notably, electronic payments helped to mitigate what would otherwise have been an even slower recovery from the global recession as card penetration and usage provided an important and measureable boost to economies.
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%.
Highlights of the Visa-Moody’s Analytics study:
- U.S. Economic Growth: Card usage in the U.S. increased GDP by 0.3 percent, adding $127 billion to the U.S. economy.
- Global Economic Growth: In some countries, card usage increased consumption significantly – at the top of that list: China by 4.89%; Chile by 1.28%; and Brazil by 1.15%.
- 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.
- Supporting Government: Electronic payments lead to a reduction in the gray economy by increasing transparency and generating additional tax revenue.
- Impact of Future Card Growth: Moody’s Analytics found that a 1% increase in card usage across the 56 countries in the study produces an annual increase of 0.056% in consumption. Given recent card penetration growth rates and the additive effects calculated on future GDP, Moody’s Analytics estimates a meaningful 0.25% addition to consumption and 0.16% additional GDP.
This survey is the second iteration, following a study conducted by Moody’s Analytics from 2003 to 2008.
You can find a copy of the study here.
[Image courtesy: Visa]