Economies prioritising payment digitisation well-placed to fight financial risks, says Mastercard
The global payments firm says a higher card usage contributed to higher consumption of goods and services
Countries adopting digitised payment solutions are well-positioned to fight risks related to financial exclusion, unemployment and the cost of cash and corruption, a Mastercard study found.
“Early adoption and the use of digital technology allow for higher productivity levels through more efficient use of capital and labour … such as the benefits of real-time data in logistics used by e-commerce giants,” the global payments firm said in its report on Tuesday.
A 10 per cent increase in internet use in an exporting country, for example, can increase the number of products traded between two companies by 1.5 per cent as a result of buyers and sellers being able to communicate directly.
“And the very speed, at which digital technologies boost innovation, often requires new regulation to avoid unfair competitive advantage,” Mastercard said.
Digital payments and online transactions have been surging as consumers opt for contactless transactions amid the coronavirus pandemic. In the UAE, one in four transactions is now digital, Mastercard estimates.
A higher usage of cards in 70 countries - representing 90 per cent of the world’s gross domestic product - contributed an additional $296 billion (Dh1.08 trillion) to consumption, according to a Mastercard study conducted between 2011 and 2015.
“A 1 per cent increase in the use of digital payments produced an average annual increase of $104bn in the consumption of goods and services … representing a 0.04 per cent GDP increase in developed markets and 0.02 per cent in developing ones," the study found.
Countries are recognising digitised payment economies as an effective way to contain challenges, grow GDP and attain financial inclusion, said Khalid Elgibali, division president at Mastercard in the Middle East and North Africa region.
The pandemic has further expedited the use of contactless payments across the region, which has traditionally favoured the use of cash.
Last month, Mastercard increased contactless payment limits across the region to help customers avoid touching keypads during the coronavirus outbreak.
Currently, almost one in nine Mastercard transactions at point-of-sale terminals in the Mea region are contactless - a payment method that does not require a user enter a personal identification number or provide a signature.
Updated: May 19, 2020 09:52 PM