Global Study Highlights Economic Benefits of ‘Cashless Cities’
October 11 2017 - 8:00AM
Business Wire
Visa (NYSE: V) announced today the results of an independent
study conducted by Roubini ThoughtLab and commissioned by Visa
examining 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 U.S. $470 billion per
year across the 100 cities studied – roughly the equivalent to 3%
of the average GDP for these cities.
“Cashless Cities: Realizing the Benefits of Digital Payments”,
is a unique study that quantifies the potential net benefits
experienced by cities which 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% 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. According to the study, these benefits could add
up to combined direct net benefits of approximately U.S. $470
billion across the 100 cities that were analyzed:
- Consumers across the 100 cities could
achieve nearly $28 billion per year in estimated direct net
benefits. This impact would be derived from factors including up to
3.2 billion hours in time savings conducting banking, retail and
transit transactions, in addition to a reduction in cash-related
crime.
- Businesses across the 100 cities could
achieve more than $312 billion per year in estimated direct
benefits. This impact would derived from factors including up to
3.1 billion hours in time savings processing incoming and outgoing
payments and increased sales revenues stemming from extended online
and in-store customer bases. The study also found that accepting
cash and checks costs businesses 7.1 cents of every dollar received
compared to 5 cents of every dollar collected from digital
sources.
- Governments across the 100 cities could
achieve nearly $130 billion per year in estimated direct benefits.
This impact would be derived from factors including increased tax
revenues, increased economic growth, cost savings from
administrative efficiencies and lower criminal justice costs due to
reduced cash-related crime.
“This study demonstrates the substantial upside for consumers,
businesses and governments as cities move toward greater adoption
of digital payments,” said 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.”
As cities increase use of digital payments, the positive impacts
can extend beyond financial benefits to consumers, businesses, and
government. The shift to digital payments also may have a catalytic
effect on the city’s overall economic performance, including GDP,
employment, wage, and productivity growth.
“The use of digital technologies—from smart phones and wearables
to artificial intelligence and driverless cars—is rapidly
transforming how city dwellers shop, travel, and live,” said 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.”
“Cashless Cities: Realizing the Benefits of Digital Payments”
offers 61 recommendations for policymakers to help their cities
become more efficient through greater adoption of digital payments.
Recommendations include undertaking financial literacy programs to
help move the unbanked into the banking system, implementing
incentives to stimulate innovation focused on scaling new payment
technologies, implementing secure open-loop payment systems across
all transportation networks and more.
Visa and Roubini Thoughtlab created an online data visualization
tool as a companion to “Cashless Cities: Realizing the Benefits of
Digital Payments.” 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. Visit the online data
visualization tool and download the report at:
www.visa.com/cashlesscities.
METHODOLOGY
Roubini Thoughtlab, a leading economics and evidence-based
research firm, surveyed 3,000 consumers and 900 businesses in 2016
across six cities (Tokyo, Chicago, Stockholm, Sao Paolo, Bangkok
and Lagos) that represent different levels of digital payments
maturity. These surveys examined the use, acceptance, and
cost-benefit impact of physical and digital money. Researchers then
extrapolated these survey results based on specific demographic and
economic data to another 94 cities around the world to determine
the net impact of moving toward a cashless economy on consumers and
businesses in each location. Through other sources, the research
was also able to identify expected impacts on government.
Researchers used World Bank, Organisation for Economic Co-operation
and Development, and other well-respected secondary data sources to
augment the survey results and build the overall findings. An
econometric model used by various central banks and other
institutions – the National Institute Global Econometric Model
(NiGEM) – was used to estimate the “catalytic” impacts (economic
growth, productivity, employment and wages) that a move toward
digital payments would have on each of the 100 cities analyzed.
Visa commissioned the study. Roubini Thoughtlab independently
conducted the surveys, managed the research and developed the
analysis.
About Visa
Visa Inc. (NYSE: V) is the world’s leader in digital payments.
Our mission is to connect the world through the most innovative,
reliable and secure payment network - enabling individuals,
businesses and economies to thrive. Our advanced global processing
network, VisaNet, provides secure and reliable payments around the
world, and is capable of handling more than 65,000 transaction
messages a second. The company’s relentless focus on innovation is
a catalyst for the rapid growth of connected commerce on any
device, and a driving force behind the dream of a cashless future
for everyone, everywhere. As the world moves from analog to
digital, Visa is applying our brand, products, people, network and
scale to reshape the future of commerce. For more information,
visit usa.visa.com/aboutvisa, visacorporate.tumblr.com and @VisaNews.
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Visa Inc.Hugh Nortonglobalmedia@visa.com
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