22:42 (GMT +7) - Monday 11/12/2017

Banking & Finance

Visa study highlights economic benefits of cashless cities

Released at: 16:25, 17/11/2017

Visa study highlights economic benefits of cashless cities

Photo: Khanh Chi (VET)

Hanoi could potentially gain an economic benefit of $600 million annually by transitioning to an "achievable level of cashlessness".

by Hong Nhung

Visa has recently announced the results of an independent study conducted by Roubini ThoughtLab, commissioned by Visa, to examine the economic impact of increasing the use of digital payments in major cities around the world.

The study estimates that relying more on electronic payments, such as cards and mobile payments, could yield a net benefit of up to $470 billion per year across the 100 cities studied; roughly equivalent to 3 per cent of the average GDP for these cities.

Hanoi, one of the subjects of the study, saw some particularly strong potential gains from going cashless. The study found that the city’s economy could see an extra $600 million per year as a result of moving away from physical money and conducting the majority of transactions electronically, while employment could jump an extra 3.5 per cent. Hanoi’s GDP, meanwhile, is predicted to grow by 36.4 basis points.

“Cashless Cities: Realizing the Benefits of Digital Payments” is a unique study that quantifies the potential net benefits experienced by cities that move to an “achievable level of cashlessness”, defined as the entire population of a city moving to digital payment usage equal to the top 10 per cent of users in that city today.

The study does not look at eliminating cash. Rather, it seeks to quantify the potential benefits and costs of significantly increasing the use of digital payments. By reducing reliance on cash, the study estimates the immediate and long-term benefits for three main groups: consumers, businesses, and governments.

“This study demonstrates the substantial upside for consumers, businesses, and governments as cities move toward greater adoption of digital payments,” said Ms. Ellen Richey, Visa’s Vice Chairman and Chief Risk Officer. “Societies that substitute digital payments for cash see benefits from greater economic growth, less crime, more jobs, higher wages, and increased worker productivity.”

“While Vietnam is still a heavily cash-oriented society, we’re seeing very positive moves across the board from consumers, merchants, and the government, with attitudes towards electronic payments now better than ever before,” said Mr. Sean Preston, Visa Country Manager for Vietnam, Cambodia, and Laos.

“Visa fully supports the State Bank of Vietnam’s roadmap for non-cash payments by 2020 and is committed to driving the adoption of electronic payments and expanding acceptance to ensure that the transition to a cashless economy is both efficient and smooth.”

As cities increase the use of digital payments, the positive impacts can extend beyond financial benefits to consumers, businesses, and government. The shift to digital payments may also have a catalytic effect on the city’s overall economic performance, including GDP, employment, wages, and productivity growth.

“The use of digital technologies - from smartphones and wearables to artificial intelligence and driverless cars - is rapidly transforming how city dwellers shop, travel, and live,” said Mr. Lou Celi, Head of Roubini ThoughtLab. “Without a firm foundation in electronic payments, cities will not be able to fully capture their digital future, according to our analysis.”

Visa and Roubini Thoughtlab created an online data visualization tool as a companion to the study. Using the data visualization tool, individuals can increase or decrease the level of digital usage in each of the 100 cities included in the study to better explore the benefits of a world less dependent on cash.

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