What is the Impact of Digital Payments on Global Economy?| Diksha Technologies
Recent research shows that economies that are more cash-intensive tend to grow slower compared to ones that have adopted digital payments. Taking digital methods of transactions has helped countries boost their annual GDP by as much as 3 percent, according to the study. It is safe to claim that digital payment solutions are an essential propeller for boosting a nation’s economy.
The upside comes not from more money but from digital’s role in simplifying the process of sending and receiving payments. For example, Bangladesh has seen positive growth in financial inclusion in the country by introducing BKash, a digital payment solution backed by its central bank. Among advanced countries, Sweden and South Korea have steadily moved away from cash. So much so, that cash payments in Sweden made up less than 2% of the nation’s total transactions in 2018. This has brought about unprecedented levels of transparency in monetary transactions, boosted internet commerce, and reduce financial fraud by a large extent.
The curious case of Cash Vs. Digital:
The popularity of cash stems from the fact that almost 2 billion people globally do not have a bank account. Money is the more reliable, inclusive, and more natural way to buy and sell. Besides, businesses accepting payments in cash do not need a massive investment in technology as opposed to digital payment methods. However, money has its share of problems. A lot of cash transactions go unrecorded, leading to substantial tax gaps that do impact a country’s finances negatively. Research claims that moving to a cashless economy will boost GDP by at least 1% for mature economies and 3% for growing countries.
Potential Benefits for economies by moving to cashless model:
The Global Uptake of Digital Payments
In September 2016, the heads of G20 states had upheld the importance of switching to digital methods of transactions, recognizing the role of digitization in helping common people get more access to financial services. Countries are working towards building specific digital policies and infrastructure to accommodate transformation in the financial sector.
Enablers of Cashless Economy:
A robust incentive plan: Targeted incentives to both merchants and consumers will encourage them to move away from cash.
Involve Private Sector: The best way to go cashless is to get into a PPP model, where the Government and private sector share accountability to build necessary technology-driven infrastructure.
Well defined policies and regulations: Well established financial rules are essential to creating a safe and secure economic environment.
There is no denying that we are leading a digital lifestyle, and as more people around the world get connected, it only makes way for online methods of business and transaction. An efficient electronic payment infrastructure benefits consumers, companies, and governments alike. Switching from the age-old technique of cash payments to a digitally-driven method comes with its share of challenges. However, a holistic approach comprising the right infrastructure, legal framework, and regulations can help overcome many problems.
Diksha Technologies is one of the front runners in helping businesses adopt digital payment solutions across the globe. Their products have not only helped generate additional revenue streams for companies but impacted a country’s economy in a big way.
To know more about Diksha MFS, please visit https://www.dikshatech.com/platforms/mobile_financial_solutions/.
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