- Visa-commissioned study, “Cashless Cities: Realizing the Benefits of Digital Payments”, indicates that by 2032, cashless payments could increase Karachi’s employment by 4.7%
Karachi, Pakistan; 06 August 2018: Visa (NYSE:V), the world leader in digital payments, launched an independent study that examines the economic impact of increasing the use of digital payments in major cities around the world, including Karachi. The global Visa report, titled “Cashless Cities: Realizing the Benefits of Digital Payments”, conducted by Roubini ThoughtLab and commissioned by Visa, was launched during a media event with the support of the Karachi Chamber of Commerce and Industry (KCCI).
The findings as part of the study reveal that an increased usage of digital payments, such as cards and mobile payments, could potentially yield a net benefit of US$ 1.5 billion (Rs 181.5 billion) annually to consumers, businesses, and government in Karachi.
The Cashless Cities study quantifies the immediate and long-term benefits for three main groups in Karachi:
- Consumers, who could save nearly US$ 0.1 billion (Rs 12.1 billion) in time savings while conducting banking, retail and transit transactions, as well as a reduction in cash-related fraud;
- Businesses, which could recover approximately US$ 1.1 billion (Rs 133.1 billion) in time savings while processing incoming and outgoing payments, and increased sales revenues stemming from extended online and in-store customer bases; and
- Government, which could save nearly US$ 0.3 billion (Rs 36.3 billion) from factors including increased tax revenues, economic growth, and cost savings from administrative efficiencies.
Visa’s global study does not look at eliminating cash; rather, it evaluates the benefits that can be derived when a city transitions to an “achievable level of cashlessness” - defined as the entire population of a city moving to digital payment usage equivalent to the top 10% of its users today.
Commenting on the results, Kamil Khan, Country Manager for Visa in Pakistan said: “As the government of Pakistan pushes forward with the ‘Digital Pakistan’ policy-led initiative, digital payments offer an immense, untapped opportunity to boost the country’s economic growth. With the rising rate of smart phone penetration in Pakistan and eCommerce forecasted to be worth U$ 1 billion by 2020, the use of digital payment methods is expected to increase significantly, paving the way for the transition to a cashless economy. Visa is well positioned to work with valuable partners such as the KCCI as well as with government bodies, the merchant community, banks and consumers to drive the adoption of cashless payments and aid in the country’s transformation to a knowledge economy.”
The guest of honour and key speaker at the event, Muffasar Atta Malik, President of the Karachi Chamber of Commerce & Industry, commented: “I believe this initiative from Visa ties in well with the KCCI’s vision to improve the business environment and economic well-being of Pakistan, especially that of Karachi. Visa’s Cashless Cities study encapsulates unique findings that will prove to be of great interest to our industry experts, thought leaders and decision-makers in the country. The use of cash is not only time consuming, but it is inefficient and often risky, and this study underpins that view by highlighting the significant and tangible benefits people, businesses and government of Karachi can realise by going cashless.”
Majeed Hujair, Senior Director, School of Public Policy for Central and Eastern Europe, Middle East and Africa (CEMEA), Visa, commented: “According to a World Bank report approximately 100 million adults in Pakistan don’t have access to regulated financial services, accounting for 5% of the world’s unbanked population. Also, there is an inherent lack of trust when it comes to conducting digital transactions. However, our study demonstrates the many benefits smart payments can bring to Karachi’s economic drivers, with results indicating that by 2032, adoption of cashless payments could potentially increase employment by 4.7% and GDP growth rates by 14.3 basis points. These results also find their significance at a time when the country has launched its first major digital policy aimed towards creating more job opportunities and accelerating economic growth. We look forward to working as a strategic partner of the government to help realize these objectives by enabling the merchant community and consumers with the shift to digital payments.”
“Cashless Cities: Realizing the Benefits of Digital Payments” offers over 60 recommendations for all ecosystem participants, including decision makers, to help their cities become more efficient through greater adoption of digital payments. These include undertaking financial literacy programs to help move the unbanked into the banking system and implementing incentives to stimulate innovation focused on launching new payment technologies.
Full findings of the study, as well as the online visualization tool, can be found on www.visa.com/cashlesscities.
Roubini Thoughtlab, a leading economics and evidence-based research firm, surveyed 3,000 consumers and 900 businesses in 2016 across six cities (Tokyo, Chicago, Stockholm, Sao Paolo, Bangkok and Lagos) that represent different levels of digital payments maturity. These surveys examined the use, acceptance, and cost-benefit impact of physical and digital money. Researchers then extrapolated these survey results based on specific demographic and economic data to another 94 cities around the world to determine the net impact of moving toward a cashless economy on consumers and businesses in each location. Through other sources, the research was also able to identify expected impacts on government. Researchers used World Bank, Organisation for Economic Co-operation and Development, and other well-respected secondary data sources to augment the survey results and build the overall findings. An econometric model used by various central banks and other institutions – the National Institute Global Econometric Model (NiGEM) – was used to estimate the “catalytic” impacts (economic growth, productivity, employment and wages) that a move toward digital payments would have on each of the 100 cities analyzed. Visa commissioned the study. Roubini Thoughtlab independently conducted the surveys, managed the research and developed the analysis.
About Visa Inc.
Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network - enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. The company’s relentless focus on innovation is a catalyst for the rapid growth of connected commerce on any device, and a driving force behind the dream of a cashless future for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information, visit www.visamiddleeast.com, www.visanewsmena.tumblr.com or follow us on Twitter @Visamiddleeast.
The Karachi Chamber of Commerce and Industry (KCCI) was established in 1959 and represents the mainstream of economic activities in Pakistan by virtue of its location in the industrial and commercial hub of the country. KCCI was formed after the amalgamation of four trade bodies, the Pakistan Merchants Association, Buyers and Shippers Chamber, Chamber of Commerce Pakistan and All Pakistan Chamber of Commerce & Industry. The organization's policies and programs are determined by a 30 member Managing Committee which is elected by the members. There are two reserved seats for women entrepreneurs. One seat each is reserved for representatives/nominations from the Chamber's affiliated seven industrial town associations. The President is elected by the members (General Body) and the Managing Committee elects Senior Vice President and Vice-President. For more information kindly visit www.kcci.com.pk
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