Visa-Commissioned Study Estimates Migration $300Bto GDP Across 70 Countries

Visa-Commissioned Study Estimates Migration $300Bto GDP Across 70 Countries

Karachi: March 14, 2016 –Visa Inc. today released the results of a new 2016 studyconducted by Moody’s Analytics thatanalyzed the impact of electronic payments on economic growth across 70 countries between 2011 and 2015. The Visa-commissioned study found that increased use of electronic payment products, including credit, debit and prepaid cards, addedUS$296B to GDP, while raising household consumptionof goods and services by an average of 0.18 percent per year.In addition, Moody’s economists estimate that the equivalent to 2.6 million new jobswere created on average, annually,over the five-year period as a result of increased use of electronic payments. The 70 countries in the study make up almost 95 percent of globalGDP.“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.”

Findings from the study were shared in the report, “The Impact of Electronic Payments on Economic Growth,” which also indicated that the electronification of payments benefited governments and contributed to a more stable and open business environment. Additionally electronic payments helped to minimize what is commonly referred to as the grey economy — economic activity that is often cash-based and goes unreported.  As a result, electronic payments provided a higher potential tax revenue base for governments, while also bringing the added benefits of lower cash handling costs, guaranteed payment to merchants and greater financial inclusion for consumers.”These findings reinforce the many positive benefits that electronic payments bring tolocal economies all over the world,” said Charlie W. Scharf, Chief Executive Officer, Visa Inc.“This research also suggests that the right public policiescan create an open, competitive payment environment,and contribute to economic growth and job creation. At Visa we are partnering globally with governments, financial institutions, merchants and technology companies to develop innovative payment products and services that will accelerate electronic acceptance, grow commerce, and bring the benefits of card payments to more people everywhere.”

Highlights of the global study include:

• Growth Opportunities:Card Penetration:Real consumption grew at an average of 2.3 percent from 2011 to 2015, of which 0.01 percent is attributable to increased card penetration. This implies that card usage accounted for about 0.4 percent of growth in consumption.Since consumption growth is, on average, faster in emerging economies, those countries also have more to gain by increasing card usage.

Card Usage:Countries with the largest increases in card usage experienced the biggest contributions in growth.  For example, big increases in GDP were recorded in Hungary (0.25%), the United Arab Emirates (0.23%), Chile (0.23%), Ireland (0.2%), Poland (0.19%) and Australia (0.19%). In most countries, card usage increased regardless of economic performance.

• Contribution to Employment:

Increased card usage added the equivalent to almost 2.6 million jobson average, per year,across the 70 countries sampled between 2011 and 2015. Notably, the two countries with the greatest average job increases were China (427,000 jobs added) and India (336,000 jobs added), which both had large gains in employment due to the combination of fast growing labor productivity and increased card usage.

• Emerging Markets and Developed Countries:

Both emerging markets and developed countries experienced gains in consumption due to higher card usage. Increased card usage added 0.2 percent to consumption in emerging markets, compared with 0.14 percent in developed countries between 2011 and 2015. The corresponding figures for GDP were 0.11 percent for emerging economies and 0.08 percent for developed countries, and suggeststhat all markets, regardless of current card penetration rates, can benefit from increases in consumption due to increases in card usage.

• Potential Future Growth:

Across the 70 countries in the study, Moody’s found that every 1 percent increase in usage of electronic payments could produce, on average, an annual increase of approximately $104 billion in the consumption of goods and services. Assuming all future factors remain the same, this could result in an annual average increase of 0.04 percent to GDP attributable to card usage.The study highlights thatexpanding electronic payments alone will not necessarily increase a country’s prosperity — it requires the support of a well-developed financial system andhealthy economy to have the greatest impact.The report recommends at a macro-level, to encourage the further electronification of payments, countries must promote policies that minimize unneeded regulation, create a robust financial infrastructure, and lead to greater consumption.Regional Highlights include:

Regional Contribution to GDP

Due to somewhat lower penetration in the Middle East compared to the other regions studied, card usage added 0.09% to GDP in the Middle East.

UAE: UAE recorded a 0.23% increase in GDP due to increased card usage during the five year period studied.Increased electronic payment usage added US$3,700,000,000 to the UAE’s GDP from 2011 to 2015. Like the other notable markets, UAE experienced over a 6 percentage point increase in card usage.

• Saudi Arabia: Increased electronic payment usage added US$3,430,000,000 to the country’s GDP from 2011 to 2015.
• Egypt: Increased electronic payment usage added US$10,000,000 to the country’s GDP from 2011 to 2015.

Regional Contribution to Jobs

The Middle East had the fewest average jobs added per year (9,000), but this was likely a result of the relatively smaller population than in the other regions.

UAE:Increased electronic payment usage created the equivalent to an average of 14,170 jobs in the UAE per year between 2011 and 2015.

• Saudi Arabia: Increased electronic payment usage created the equivalent to an average of 12,470 jobs in Saudi Arabia per year between 2011 and 2015.
• Egypt: Increased electronic payment usage created the equivalent to an average of 2,300 jobs in Egypt per year between 2011 and 2015.