Increased electronic payment usage created the equivalent of an average of 26 550 jobs in South Africa per year between 2011 and 2015.
This is according to a new study conducted by Moody’s Analytics on behalf of Visa.
In general, the study found that the evolution to electronic payments from cash and cheques has changed the behavior of, and in some cases the relationship between, consumers and merchants. Electronic payments provide greater access to financial resources.
Consumers using cash or cheques are limited to the funds they have on hand, while cards provide consumers with access to all available funds or lines of credit and give merchants peace of mind about payment guarantees.
The study found, however, that expanding electronic payments alone will not necessarily increase a country’s prosperity — it requires the support of a well-developed financial system and healthy economy to have the greatest impact.
Cards also provide consumers the means to participate in the digital economy and merchants access to a global consumer base.
The study found that, as a result of the increased use of electronic payments, an estimated $3.1bn (about R47.5bn) had been added to SA’s gross domestic product (GDP) from 2011 to 2015.
SA recorded an average 0.18% increase in GDP from additional card usage, three times the regional average and illustrating the strong benefits of electronic payments that accompany a developed financial services system.
African countries as a whole added on average about 8 000 jobs per year from increased card usage and experienced, on average, a 0.05% increase in GDP due to increased card penetration.
“Many African countries are in the early stages of developing their financial systems with appropriate infrastructure to support electronic payments. In the coming years, the increase in the use of mobile phone technologies to make payments is expected to increase electronic payments penetration,” according to the study, which was done across 70 countries, making up almost 95% of global GDP.
The study found that increased use of electronic payment products, including credit, debit and prepaid cards, added a total of $296bn to the GDP of these 70 countries combined, while raising household consumption of goods and services by an average of 0.18% per year.
In addition, Moody’s economists estimate that the equivalent of 2.6 million new jobs were created on average per year over the five year period of the study as a result of increased use of electronic payments.
“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation,” said Mark Zandi, chief economist of Moody’s Analytics. “Those countries which saw large increases in card usage also saw larger contributions to overall growth in their economies.”
The study also found that the electronification of payments benefited governments and contributed to a more stable and open business environment. Additionally, electronic payments helped to minimise what is commonly referred to as the grey economy – economic activity that is often cash-based and goes unreported.