Ecomm
ECONOMIC & CONSUMER CREDIT ANALY TICS
The Impact of Electronic Payments on Economic Growth
January 2013
Prepared By
Mark Zandi Chief Economist Mark.Zandi@moodys.com
Virendra Singh Director Virendra.Singh@moodys.com
Justin Irving Associate Economist Justin.Irving@moodys.com
Table of Contents
Executive Summary
3
» » » » » » » »
Rising Card Payments Drive Economic Growth Study Methodology 4-6
The Macroeconomic Impact of Card Usage
Card Payments, Private Consumption and GDP Results Differ for Developed and Emerging Economies Methodology
The Value of Card Payments: Less Friction, More Efficiency
Cards Benefit All Parties Involved in Many Ways Benefits to Consumers and Merchants
7-8
Ongoing Effects on GDP of Greater Card Penetration: Measuring Elasticity by Country
GDP Growth and Card Penetration
9
Conclusions Appendix
10 11-16
» »
Tables The Model
MOODYS ANALYTICS
2
Executive Summary
Rising Card Payments Drive Economic Growth
Payment cards are not just convenient– they help stimulate growth for economies as well, according to a study performed by Moody’s Analytics. The rapid proliferation of cards in the past 50 years has changed how consumers pay for goods and services, and how merchants manage their businesses. Cards reduce friction in the economy by providing consumers convenient and secure access to their funds, while reducing cash and check handling for merchants and expanding the pool of customers who are guaranteed to pay. Moody’s Analytics set out to test whether the long-term shift to credit and debit cards stimulates economic growth, and found that electronic card payments continue to have a meaningful impact on the world economy. These findings are notable as the global economy struggles to recover, and as individual countries consider whether to take steps to enable the wider use of cards. Moody’s Analytics studied 56 countries that make up 93% of world gross domestic product, over a
The Impact of Electronic Payments on Economic Growth
January 2013
Prepared By
Mark Zandi Chief Economist Mark.Zandi@moodys.com
Virendra Singh Director Virendra.Singh@moodys.com
Justin Irving Associate Economist Justin.Irving@moodys.com
Table of Contents
Executive Summary
3
» » » » » » » »
Rising Card Payments Drive Economic Growth Study Methodology 4-6
The Macroeconomic Impact of Card Usage
Card Payments, Private Consumption and GDP Results Differ for Developed and Emerging Economies Methodology
The Value of Card Payments: Less Friction, More Efficiency
Cards Benefit All Parties Involved in Many Ways Benefits to Consumers and Merchants
7-8
Ongoing Effects on GDP of Greater Card Penetration: Measuring Elasticity by Country
GDP Growth and Card Penetration
9
Conclusions Appendix
10 11-16
» »
Tables The Model
MOODYS ANALYTICS
2
Executive Summary
Rising Card Payments Drive Economic Growth
Payment cards are not just convenient– they help stimulate growth for economies as well, according to a study performed by Moody’s Analytics. The rapid proliferation of cards in the past 50 years has changed how consumers pay for goods and services, and how merchants manage their businesses. Cards reduce friction in the economy by providing consumers convenient and secure access to their funds, while reducing cash and check handling for merchants and expanding the pool of customers who are guaranteed to pay. Moody’s Analytics set out to test whether the long-term shift to credit and debit cards stimulates economic growth, and found that electronic card payments continue to have a meaningful impact on the world economy. These findings are notable as the global economy struggles to recover, and as individual countries consider whether to take steps to enable the wider use of cards. Moody’s Analytics studied 56 countries that make up 93% of world gross domestic product, over a