Ireland’s move from being a cheque and cash dependent economy to an electronic one has resulted in €1.8bn being added to the nation’s GDP in just the last four years, creating an average of 3,700 jobs each year in the process.
“The cheque is in the post,” were usually the last words Irish business owners heard from a customer before having to go to the bank manager in order to make payroll or before the bailiffs came calling.
Ireland’s dependence on cheques and cash payments were a thorn in the side for most business owners, even if they didn’t realise it themselves, and this made Ireland something of an anomaly compared with more progressive countries, especially Scandinavian ones.
But, in the last few years, something has changed and, according to a new Visa-commissioned study by Moody’s Analytics, the move to electronic payments has added €1.8bn to Ireland’s GDP.
The contribution of the growth of electronic payments in Ireland to Irish GDP was double the European average.
Moody’s economists also estimated that an average of approximately 3,700 jobs were created per annum over the four-year period as a result of the increased card penetration.
The Moody’s Analytics study, which analysed the impact of electronic payments on economic growth across 70 countries between 2012 and 2015, found that increased use of electronic payment products, including credit, debit and prepaid cards, added $296bn to GDP globally. The 70 countries in the study make up almost 95pc of global GDP.
“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation,” noted Mark Zandi, chief economist, Moody’s Analytics.
“Those countries which saw large increases in card usage also saw larger contributions to overall growth in their economies.”
The study indicates that the electronification of payments benefits governments and contributed to a more stable and open business environment.
Annual spending on Visa cards – debit, credit and prepaid – in Ireland reached a new record of €31.7bn last year.
As a result, transactions with a Visa card – debit, credit and prepaid – now account for more than a third of Irish consumer spending.
This is due to the continued shift from cash and cheque usage as consumers opt for the convenience and security of card payments.
New technology such as contactless payments for purchases up to €30 has increased overall card usage, with more than one million contactless transactions now being made in Ireland every week.
“Over the last 50 years, the rapid proliferation of electronic payments has enabled and improved how consumers pay for goods and services, how merchants manage their businesses, and how governments make and collect all sorts of payments,” Philip Konopik, Ireland Country Manager for Visa Europe, said.
“The report findings reinforce the positive benefits that electronic payments have brought to Ireland, as increased consumption has contributed to growth in Irish GDP and also seen firms expand in order to meet increased demand for goods and services.”
“We ultimately want to see this positive trend continue and are working globally with governments, financial institutions, merchants and technology companies to develop innovative payment products and services that will accelerate electronic acceptance, grow commerce, and bring the benefits of card payments to more people everywhere,” Konopik said.
Main image via Shutterstock