Since credit and debit card use began its rapid growth some 40 years ago, the way consumers pay for goods and services has evolved to mostly card payments from cash and check use. But credit and debit cards also are helping to increase economic growth by creating jobs and speeding up transactions, Moody’s, a division of Moody’s Analytics Inc., reports in a recent study about the impact of electronic payments on economic growth.


Card use helped create 4.9 million jobs among the 51 countries Moody’s studied from 2003 to 2008, the West Chester, Pa.-based company found. In the U.S., the impact was the equivalent of 160,000 jobs.


When gross domestic product increases, “underlying that is a creation of jobs because when consumption increases, factories in turn have to make more goods, which leads to more jobs,” Virendra Singh, director of Moody’s and co-author of the report, tells PaymentsSource. “The jobs created are generally not specific to one industry,” he adds.


Merchants benefit from card payments because they must handle less cash and fewer checks. Moreover, merchants also benefit from card payments because they have access to a larger scope of consumers who can guarantee payment at the point of sale, according to the report. 


Additionally, cards provide more flexibility because consumers using cash are limited to the amount they have with them. Consumers also may use cards for more expensive transactions, and cards enable merchants to save time. For example, if a consumer pays for a purchase with cash, the merchant has to deposit it in the bank. Moreover, merchants lose time waiting to receive payments for check, Singh says.


Cards also can save merchant in staffing costs, Moody’s contends. For example, when a consumer uses a card at a self-service gas pump, merchants do not need to hire someone to handle that task.


Card use also can reduce the cost to central banks because they do not have to process as much paper.


The migration from cash to cards has been going on for years and is essentially a “global phenomenon,” Gwenn Bézard, research director at Boston-based Aite Group LLC, tells PaymentsSource. Most consumers are embracing electronic payments, especially debit card payments, he adds.


Overall, Moody’s believes credit card purchases enable consumers to spend more consistently over time, despite changes in their incomes. 

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