Spread of non-cash payments contributes to Azerbaijan’s GDP
More and more consumers are discovering the advantages of non-cash payment methods in Azerbaijan. The use of payment cards in Azerbaijan has grown steadily, contributing to the growth of GDP by $70 million in total.
More and more consumers are discovering the advantages of non-cash payment methods in Azerbaijan. The use of payment cards in Azerbaijan has grown steadily, contributing to the growth of GDP by $70 million in total.
Increased use of payment cards (credit, debit and prepaid cards) has also promoted an increase in consumer spending by 0.06 percent on average per year from 2011 to 2015, according to the report on the research results conducted by Moody's Analytics on the request of international payment system Visa.
The development of the noncash payments in Azerbaijan enabled to create 1,130 new jobs on average a year from 2011 to 2015, according to the research results.
This achievement would not be possible without close cooperation of public authorities, regulators and partner banks in Azerbaijan with Visa.
Visa intends to continue maintaining close collaboration to achieve the common goal on increasing the use of electronic payments which will develop Azerbaijan’s economy, said Igor Kovalyov,Visa country manager in Azerbaijan, Belarus and Moldova.
Moody's Analytics stated that the increased use of the electronic means for payment contributed to the increase of GDP in 70 countries to $296 billion, while growth of the consumer spending averaged 0.18 per cent a year.
The use of electronic payments is one of the main factors stimulating consumption, industrial production, economic growth and job creation. Countries with high level of use of the payment cards have demonstrated higher rates of economic growth, Mark Zandi, the chief economist at Moody's Analytics, said in the report.
The research results showed that the introduction of electronic payment helped to create more stable and transparent business environment. In addition, the use of non-cash payments reduced the shadow economy - economic activities mainly based on cash payments and not declared in the financial statements.
Moreover, the use of electronic means for payment results in provision of higher tax revenues, contributes to reduce costs which is associated with storing and handling the cash and helps customers to get expanded access to the financial services.
Moody’s research results highlight the positive impact that electronic payments had on the economic development of various countries around the world once again. This study showed that the right policy pursued by the government might lead to open and competitive payment ecosystem, as well as, to contribute to economic growth and job creation.
The highest GDP growth was recorded in the countries where the maximum increase in the level of use of payment cards has been recorded during the study period. So, the leaders were Hungary (0.25 per cent), the United Arab Emirates (0.23 percent), Chile (0.23 percent), Ireland (0.2 percent), Poland (0.19 percent) and Australia (0.19 percent).
In the CIS countries, Russia has the highest index with 0.33 percent. In Ukraine, Azerbaijan and Kazakhstan, this figure stood at 0.07, 0.03 and 0.02 percent respectively.
Moody's analysts stated that the real consumer spending increased by 2.3 percent on average from 2011 to 2015.0.01 percent out of it accounted for the growth of payment cards.
Accordingly, the introduction of the electronic payments contributed to the growth of consumption by 0.4 percent on average. The greatest effect was observed in developing countries, where the growth in average consumer spending is higher, said the report.
Moody's experts concluded that expanding the use of electronic payments by one percent can increase consumer spending by an average of $104 billion per annum. Assuming that the growth factors will not change in the future, the use of payment cards will increase GDP on average by 0.04 percent.
Analysts believe that in order to accelerate the transition to electronic payments, countries are encouraged to implement policies aimed at simplifying regulations, to facilitate the creation of reliable financial infrastructure and to stimulate consumption.
Moody's Analytics survey covers 70 countries, which account for almost 95 percent of global GDP, including some countries of the CIS, Central and Eastern European regions.The study analyzed the impact of electronic payments on economic growth in countries from 2011 to 2015.