Study Concludes that Debit and Credit Card Usage Boosted Gross Domestic
Product (GDP) in Canada, and Global GDP by $983 Billion between 2008
TORONTO, Feb. 7, 2013 /CNW/ - The growth in the use of electronic
payment products, such as credit and debit cards, added US$9.7 billion
to the Gross Domestic Product (GDP) of Canada over the past four years,
according to a study conducted for Visa by Moody's Analytics, a leading
independent provider of economic forecasting.
The study of 56 countries, including Canada, that represent 93 per cent
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 $9.7 billion to Canada's GDP,
there's no denying the benefits of electronic payments here, or 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 Jim
Allhusen, Visa country manager for Canada.
Allhusen continued, "We are excited about the prospects of increasing
electronic payments in Canada through new, innovative solutions, and we
look forward to working with local businesses, governments and industry
stakeholders to continue to expand and support 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:
Regional Economic Growth: Across North America, the adoption of electronic payments increased
GDP. In addition to the US$9.7 billion increase in Canada, electronic
payments helped increase GDP in the U.S. by US$127.4 billion and in
Mexico by $7.8 billion.
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 cheque 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
Supporting Government: Electronic payments lead to a reduction in the grey economy, or
unregulated market, by increasing transparency and generating
additional tax revenue.
Impact of Future Card Growth: Moody's Analytics found that a one per cent increase in card usage
across the 56 countries in the study produces an annual increase of
0.056 per cent in consumption. Given recent card penetration growth
rates and the additive effects calculated on future GDP, globally,
Moody's Analytics estimates a meaningful 0.25 per cent addition to
consumption and 0.16 per cent additional GDP.
Card Growth Boosts Recovery: From 2008 to 2012, global real GDP was only 1.8 per cent per year.
Without increased card usage, that growth would have been 1.6 per cent.
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 at: www.corporate.visa.com/newsroom/media-kits/economic-impact.
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
SOURCE: VISA Canada Corporation
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