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Economy
Nov 18, 2017 / 14:22

Hanoi to receive multiple benefits through e-payment

Ngoc Thuy

According to an independent report of Roubini Thoughtlab, an E-consult Solutions Affiliate, and commissioned by VISA, an increase in digital payments could result in total direct net benefits of US$470 billion per year across the 100 cities. That boils down to about $4.7 billion in net benefits to each city per year—the equivalent to about 3% of each city’s average GDP.

Vice Chairman of VASA in Risk and Public Policy said, despite Vietnam still mainly uses cash, but almost all components of the economy, from customers, retailers to the government have a positive opinion with regard to e-payment. Director of Visa in Vietnam, Cambodia and Laos Sean Preston said, VISA is always supportive to the State Bank of Vietnam (SBV) in the proposal of heading to a cashless economy by 2020. As such, VISA is committed to facilitate e-payment and expand the network accepting payment to ensure a smooth transition to a cashless economy. 
 
Hanoi can receive an additional of 600 million USD per year for benefits of moving from physical money to digital payment systems.
Hanoi can receive an additional of 600 million USD per year for benefits of moving from physical money to digital payment systems.
Hanoi, one of the city covered in the report, is witnessing the growing trend of cashless payment. As such, the report showed Hanoi can receive an additional of 600 million USD per year for benefits of moving from physical money to digital payment systems. Specifically, in a net benefits and catalytic benefits data for 100 cities in achievable cashless scenario, Hanoi can have an increase in GDP of 3.3%, with an average annual GDP growth rate of 36.4 points, along with 67,000 additional job created, an increase of 0.23% in productivity growth and 0.21% in wage growth. 

This study is unique in that for the first time it looks at the net benefits associated with adopting digital payments and does so at the city-level. The assessment is carried out for 100 cities across 80 countries, segmented by stage of digital maturity, with these cities modelled to an “achievable cashless scenario”. This scenario is defined as the entire population moving to digital payment usage equal to the top 10% of the users in that city today. The findings provide compelling support for greater adoption of digital payments. 
 
A net benefits and catalytic benefits data for cities in achievable cashless scenario.
It is estimated that increasing digital payments across the 100 cities could result in total direct net benefits of US$470 billion per year. On average, these net benefits represent slightly over 3% of a city’s current GDP. Greater economic activity spurred by digital payments also supports higher employment as well as improvements in wages and workers’ productivity. This study also finds that on average, across the 100 cities, increased usage of digital payments could add 19 basis points to a city’s GDP and support over 45,000 additional jobs per year per city, while worker productivity and wages could increase by 14 and 16 basis points per year per city, respectively. To put the GDP growth number in perspective, the 19 basis points increase in economic growth per year across the 100 cities translates to nearly $12 trillion of total additional economic activity over the next 15 years – an amount exceeding China’s 2016 GDP.

Consumers across the 100 cities currently spend an average of 32 hours a year – nearly a full work week - on cash-related payment activities. Greater adoption of digital payments is estimated to reduce this figure to 24 hours a year, saving consumers in the 100 cities an average of over $126 million per year. When other benefits of digital payments are taken into account, such as reduction in cash-related crime, these savings could increase to $278 million per city, equivalent to about $67 per adult per year.

Accepting cash and checks costs businesses about 7 cents of every dollar received compared to 5 cents for every dollar collected from digital sources. When combining savings with increased sales from digital payments usage, our study projects that total net benefits to businesses across all 100 cities could amount to over $312 billion per year after transitioning to an achievable level of cashless activity. 

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