Monday, July 21, 2003

Electronic Payments Help Drive Economic Growth, Says Visa-Sponsored White Paper

ZDNet India reports about a ministerial-level session of the UN's Economic and Social Council in Geneva. During the event, the white paper, 'The Virtuous Circle: Electronic Payments and Economic Growth,' was presented.

The event was co-hosted by Visa, Global Insight, and FINCA International. At the invitation of H.E. Amb. Gert Rosenthal (Guatemala), President, UN Economic and Social Council, the event brought together senior officials from the United Nations and specialized agencies and official representatives from 54 countries.

Essentially, the paper notes that the move (from cash) to a deposit-based economy allows any society to more efficiently use the savings/funds in an economy. The reason is that centralised funds can be used more quickly and efficiently than decentralised money. Global Insight repeats the estimate from a study by Humphrey, Willesson and Bergendahly:

Electronic payment networks, by increasing the efficiency and velocity of payments, have the potential to create cost savings of at least 1 percent of GDP annually over paper-based systems in any given economy.

The study itself may -for its research design- be quite interesting to macro-economists and historians. It is a nice example of biased research as it sort of summarizes the history of payments and payment theory into: the days and age before and those after Visa (Bank Americard). Still, the education effort should be commended.