Adoption of cashless payments could potentially increase Karachi's employment by 4.7 percent and GDP growth rates by 14.3 basis points by 2032, a Visa-commissioned study reveals. Visa, the world leader in digital payments, Monday 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 Thought Lab and commissioned by Visa was launched 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 $1.5 billion or 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 and revealed that consumers, who could save nearly $ 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.
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, the study said.
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 percent of its users today.
Commenting on the results, Kamil Khan Country Manager for Visa in Pakistan said that 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.
He said that with the rising rate of smart phone penetration in Pakistan and e-Commerce forecasted to be worth $1 billion by 20201, 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," he added.
The key speaker at the event Muffasar Atta Malik President of the Karachi Chamber of Commerce & Industry said that we 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, he added.
"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 realize by going cashless," he said.
Majeed Hujair, Senior Director, School of Public Policy for Central and Eastern Europe, Middle East and Africa (CEMEA) Visa said that according to a World Bank report approximately 100 million adults in Pakistan don't have access to regulated financial services, accounting for 5 percent of the world's unbanked population. Also there is an inherent lack of trust when it comes to conducting digital transactions, he added.
"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 percent and GDP growth rates by 14.3 basis points," he maintained.
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, he added.
"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," he said.
"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, he said.
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, Hujair said.