New research shows that moving from cash to electronic payments would have a profound effect on SA`s economy.
A study by think tank Econometrix, commissioned by Visa International, found there was a high positive correlation between card and electronic payments and real gross domestic product (GDP).
It also found a higher correlation between GDP and the measure of money supply that includes current accounts balances and cash than the correlation between GDP and the measure of the money supply that includes just cash.
Econometrix director and economist Tony Twine says a study by Global Insight conducted across 50 countries, including SA, in 2003 found a positive relationship between the growth in electronic payments and consumer spending.
In SA`s case, Global Insight suggested that a 10% increase in electronic payments` share of private consumption expenditure could translate into a 0.6% increase in GDP in 2003, amounting to R7.2 billion for the local economy.
"We concluded that it is difficult to put an exact figure on the impact, but our own research found a strong, positive correlation between the increase in electronic and card payment usage, and economic growth in SA," says Twine.
Visa announced yesterday that its member banks in SA have issued more than 10 million Visa cards as the banking sector steps up initiatives to bring the 13 million to 17 million unbanked individuals into the formal financial services system.
Ann Cobb, president of Visa International`s Central and Eastern Europe, Middle East and Africa region, says about two-thirds of the world`s population is unbanked, meaning that about four billion people mainly use cash as their sole means of transacting.
"One of the reasons that cash-dependent countries tend to have low economic growth rates is that currency stock held outside the system deprives banks of funds needed for credit expansion and monetary growth.
"Every currency unit that circulates as hard cash is a missed opportunity to invest, develop and grow an economy."
Twine says South Africans increasingly prefer card and electronic payments over other forms of payment.
"From 1989 to 2003, the value of cheque payments nationally declined from 97% to 36.5% of the total value of all transactions. Over the same period, the value of credit card payments increased from 0.2% to 2.1%. The value of total electronic payments for the same period rose 28% to 61.4%."
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