United Nations-based Better Than Cash Alliance releases a report showing the importance of digital payment and why governments and companies need to ditch the cash-dominant economy and embrace digitization of payments. The new report comes just as McKinsey Global Institute released projections that digital finance could lead to a $3.7 trillion GDP boost by 2025, create 95 million new jobs across all sectors, and save $110 billion annually in leakages in emerging countries.
The Better Than Cash Alliance research studied 25 COUNTRIES, including India, Nigeria, Tanzania, Ghana, Brazil, and Mexico, among others. What emerged were ten ‘accelerators’ or actions that regularly proved to make a strong impact in advancing the creation of economies where digital payments are widely available.
“The new McKinsey Global Institute study on digital finance for all should inspire emerging countries’ leadership to move quickly on creating economies where digital payments are widely available,” said DR. RUTH GOODWIN-GROEN, MANAGING DIRECTOR OF THE BETTER THAN CASH ALLIANCE. “We also released a study today that shows how governments and companies can rapidly shift away from cash. Building a digital economy can take significant work, but as the new data shows, it is completely achievable and will drive inclusive growth, helping people lift themselves out of poverty.”
Evidence showing the benefits of digital payments
INDIA saves US $2 billion every year by digitizing fuel subsidies also reducing payment leakages, and TANZANIA, the digitization of port business-to-government payments trimmed US $175 million in annual revenue leakages and has the potential to boost GDP by up to US $1.8 billion. BRAZIL also saved over 30 percent in transaction costs in government to
people disbursements. Lastly as of result of installing 20,000 point-of-sale devices, MEXICO experienced a 17 percent growth rate in this type of transactions between 2014 and 2015.
There is a large amount of evidence supporting the benefits of transitioning from cash to digital payments, but implementation is often difficult for governments to do on their own. This is in part because successfully creating an economy where digital payments are widely available requires a collaborative approach between many players in the public and private sectors.