Electronic payments have driven almost one quarter – or $196 billion – of total Canadian Gross Domestic Product (GDP) growth over the past 25 years, according to a new study commissioned by Visa Canada from IHS, a leading global source of information and analytics. The economic research demonstrates the measurable value of electronic payments, including credit, debit and prepaid cards.
IHS measured the total value of electronic payments in the Canadian economy and took an in-depth look at three economic sectors that are largely responsible for the positive impact: travel and tourism Canadian business and e-commerce.
Canada has been at the forefront of the global migration to electronic payments from cash and cheques, which underlies the positive findings in the report. From 2006 to 2010, the credit and debit transaction volume in Canada grew 25%, from $363.4 billion to $455.4 billion.
During the 25-year period (1986 to 2010), the report found that electronic payments also contributed to a $107 billion increase in Personal Consumption Expenditures (PCE), or consumer spending.
“Consumers are speaking with their wallets and they prefer electronic payments over inefficient cash and cheques,” said Shane Norton, Director of Consulting Services, IHS. Notably, the increase we’ve measured in consumer consumption mirrors the growing popularity of electronic payments.”
“The widespread adoption of electronic payments has been a major catalyst to the growth of global tourism,” continued Norton. “Because travellers can depend on electronic forms of payment, their tourism consumption increases, stimulating growth in one of Canada’s largest economic sectors. From 1991 to 2010, our research shows that electronic payments contributed nearly $3.1 billion to the Canadian travel and tourism industry.”
Norton explained, “Similarly, without electronic payments online commerce would be difficult to near impossible. In a country as large and diverse as Canada, the ability to buy and sell online has become essential for many businesses and consumers, adding to the overall growth in Canada’s GDP.”
According to the Benefits of Electronic Payments paper, electronic payments promote economic growth by:
providing reliable payment networks that connect buyers and sellers in Canada and abroad;
increasing consumer empowerment and economic stimulation;
offering greater security than cash and a stronger assurance of guaranteed payment than cheques;
enhancing economic transparency by reducing the “grey economy” of underreported cash transactions; and
broadening participation and inclusion in financial services.
“The results of the IHS research clearly reinforce the value that electronic payments can bring to economies by providing greater security, transparency, choice and enhanced payment options to the marketplace,” said Wayne Best, Chief Economist, Visa Inc. “We are proud to have played a role in driving the growth of electronic payments in Canada for over 40 years and we are committed to delivering new innovations, such as contactless and mobile payments, that consumers and businesses demand in an increasingly competitive economy.”
The Benefits of Electronic Payments white paper can be further explored on Visa’s new platform, www.currencyofprogress.ca, along with Visa’s ongoing innovations, partnerships, network advancements and commitments to security. The Currency of Progress platform features real-life examples, case studies and videos from around the world of ways in which Visa is empowering individuals, supporting businesses large and small, and partnering with governments.