Description:
Overall description: Digital payment innovations can be a catalyst for the digital economy. Digital payment solutions help unlock economic growth, boost tax revenues, and reduce the size of the informal economy. As a critical source of empowerment for micro and small enterprises, women entrepreneurs, and underserved populations, digital payment solutions can help improve public services, which answer citizen needs. Public-private collaboration and investments in the payment infrastructure in Poland have helped to drive unprecedented levels of digital maturity and financial inclusion. On the case of Cashless Poland Program, co-founded by Visa, we examine the effectiveness of programs focused on boosting digital payments on entrepreneurship and development of the economy as a whole. We discuss the possible ways of implementation of discussed policies around the world and provide factual insights on determinants of economic growth and financial and digital inclusion. Methodology: The session is divided into two segments. The first part (45 min) is designed to present the issue by panel speakers. Moderator will ask 1 question to all participants (5 x 4 min answer = 20 min) and 1 specific question to each of the panelists (5 x 4 min answer = 20 min). 5 minutes are dedicated to the moderator. The second part (45 min) is designed to engage onsite and online auditorium into discussion. Moderators will choose questions to either one or all of the speakers, as well as motivate participants to present their insights, desirably different from those presented by invited speakers. To facilitate the discussion, there will be an online app with questions for the auditorium. Answers will be gathered and presented in real time, anonymously. Presented answers will be used as an additional impulse to participate in the discussion. Agenda: 1 part – discussion with invited panelists (45 min). Proposed talking points of invited panelists are listed below. 1. Mr. Killion Munyama, Economist and politician of Zambian origin Digital payments help reduce informal economy and boost GDP According to A.T. Kearney, “Digital Payments and the Global Informal Economy” survey, 20 percent increase in digital payments per year for five consecutive years can reduce the GDP impact of the informal economy by up to 21.8 percent. Assuming 70 percent of informal activity transfers to the formal economy, tax revenues can also increase substantially – by 3.4% in larger economies like China and as much as 11.3% in medium-sized economies like Kenya. Digital payments facilitate adoption of more advanced digital solutions Doing business rankings list paper/digital ratio in administration procedures as one of the factors of effectiveness of the processes, which has a direct impact on the easiness to start a business or registering property. Above all, they make the procedures reliable. Digital payment accounts are often people’s first contact with other financial services. And they serve as an accelerated path to the use of other digital products. Such products as digital disbursements can also be a catalyst for financial inclusion, helping to bring unbanked and underbanked populations into the financial services mainstream. Reloadable prepaid products can function like bank accounts for some unbanked and underbanked populations, providing a secure place to store, track, and load funds. Digital payments enable sustainable and inclusive economic growth According to a comprehensive research of Moody’s Analytics, conducted across 70 reviewed countries representing 95 percent of global GDP, every one percent increase in the usage of digital payments could result in an average annual consumption increase of $104 billion. This applies to both developed and emerging markets, with emerging markets seeing the biggest GDP gains. Importantly, the data demonstrated that with the proper financial infrastructure in place, developing markets could see boosts to GDP as card penetration increases. Shift to credit, debit, and prepaid payments added US $296 billion to global GDP, raised annual household consumption of goods and services, and added the equivalent of 2.6 million new jobs on average annually. 2. Mr. Willem Pieter de Groen, CEPS Digital inclusion cannot be achieved without digitisation of micro and small merchants Around the world, hundreds of millions of small merchants provide jobs and economic vibrancy to their communities. But many do so outside the formal system and without the benefits to growth, investment and productivity that financial services bring. Moreover, financial inclusion cannot be achieved without including small merchants; they are where the world’s two billion unbanked people shop, and many are unbanked themselves. Digital payments enable micro and small businesses to thrive Digital payments help micro and small merchants grow their revenue, manage their business, and gain access to other financial services. Research has found that once businesses begin accepting digital payments, their revenues increase an average of 17%. Acceptance of digital payments can also introduce small businesses to a broader pool of potential customers through rapidly growing e-commerce channels, including exposure to international markets. More broadly, digital payments can increase merchants’ security and that of their customers by reducing the risk of theft of cash. According to a 2017 study on “The Future of Payments for Irish SMEs”, 62% of surveyed merchants expressed fears over the security risks of accepting cash, namely the potential for theft and fraud. The study revealed that 28% of merchants had reported a cash-related robbery and 33% had experienced an incident of staff fraud in the past five years. 3. Mrs. Payal Pathak, The Visa Foundation Digital payments facilitate eradication of poverty by greater financial inclusion and safe infrastructure for those providing the support Governments and NGOs can directly incentivize consumers by distributing social benefits such as food or medical expense vouchers onto payment cards or other means of payment which then must be used at the point of sale (POS) to redeem the benefits. Moving away from cash payments or paper vouchers also has the benefit of increasing efficiency and reducing program costs while providing the supporter with tangible data about how beneficiaries use their cards. Simultaneously, the distribution of cards helps to address financial inclusion by introducing recipients to electronic financial services. This mass distribution of cards also encourages development of merchant acceptance network, supporting entrepreneurship among those underserved. Women entrepreneurship is a key factor of inclusive economic growth in emerging markets Underrepresentation of women in business is a missed opportunity, from both social and economic standpoints. According to a Harvard Business Review report, women represent the largest market opportunity and control $20 trillion in annual spending. Majority of small merchants in the developing countries are women. However, they face a long list of challenges ranging from cultural and political barriers, to lack of mentoring and lack of funding. Research shows, more than 70 percent of women-owned businesses still have difficulty accessing funds. In fact, the World Bank estimates a $1.5 trillion gap in female financing and reports a staggering $300 billion annual credit deficit for formal sector women-owned small and medium sized businesses. Without capital, it is nearly impossible to start and sustain a business. Advancing women as key decision makers—fund managers, board members, mentors and employees—in the entrepreneurial ecosystem should be the priority of all decisionmakers focused on growth of the emerging markets. Digital solutions are one of the most needed tools to drive women entrepreneurship Visa Foundation research indicates that, after the funding gap, the other two most common areas of concern for women entrepreneurs are access to digital tools and strategies and guidance on the management and leadership of a business. Unlocking the full potential of women in the entrepreneurial ecosystem requires intentional structural changes, including women as central decision makers in policy, access to capital, and management of their businesses. Programs strengthening intermediaries that provide support to women entrepreneurs to fund more companies, build their capacity, connect them with appropriate sources of capital and help them scale prove to be the most effective ones. In Visa Foundation we provide programs aiming to address all abovementioned challenges, providing funds for women entrepreneurs and ecosystem supporting their entrepreneurship. 4. Mr. Konrad Ślusarczyk, Visa Europe Visa’s focus on public-private collaboration and investments in the payment infrastructure help develop digital maturity and financial inclusion of societies Visa network connects today 3.3 billion cards, 53,9 million retail locations (merchants) and 16,000 financial institutions. We operate in 200 countries, which puts us in an unique position to observe and analyse how people pay today and how digital payments enable entrepreneurs to scale their businesses and drive financial and digital inclusion. We see the digital payment solutions help unlock economic growth, boost tax revenues, and reduce the size of the informal economy. They are critical source of empowerment for micro and small enterprises, women entrepreneurs, and underserved populations. Visa-driven programs focus on expanding acceptance of digital payments in various business sectors, incl. retail, e-commerce and transportation, improving the efficiency of government-to-citizen disbursements, and enhancing government-to-business payments and procurement programs. Small and medium enterprises are a driving force of global economy, yet they often experience lack of funding, guidance or knowledge on acceptance of cashless payments. Thus, Visa committed itself to increasing acceptance of cashless payments by micro, small and medium merchants and provides them with funding and guidance. Visa experts examined the barriers of development of cashless payments by merchants and paying digitally in e-commerce To facilitate Cashless Poland Program, experts from Visa Innovation Incubator examined the barriers among Polish micro and small entrepreneurs to introduce cashless payments (for example, small dental offices located outside large cities in Poland, car service stations, or hairdresser’s). They learned that one of the key reasons for installing payment terminals by merchants was understanding of benefits from introducing this method of payments. Constructing clear and comprehensible offer by banks and acquirers for merchants was one of the key results of Visa research, implemented by Cashless Poland Foundation in their support program. Further research by Visa Innovation Incubator examining consumer’s attitude to paying online in e-commerce, showed that this group of people that uses card payments in traditional commerce, is more open to use digital payments in e-commerce. One of the key results of the survey is the need of transparent communication of merchants on the accepted payment methods as one of the determinants of paying online in e-commerce. 5. Mr. Paweł Widawski, Cashless Poland Foundation Cashless Poland Program proves that cooperation of different market entities is needed to fight with barriers for development of cashless payments Cashless Payments Program created in 2017 by The Cashless Poland Foundation is based on the agreement between public administration (Polish Ministry of Finance) and private companies – payment organizations, acquirers and banks and as such is a unique example of cooperation of a very wide group of entities, competing with each other in their day-to-day business. The project focuses on small businesses that do not accept cashless payments or contactless mobile payments for their products and services. Entrepreneurs that participate in the program benefit from a free payments terminal installation and 1 year free of charge cashless payments service. In 2019, Poland exceeded 230,000 terminals that have been installed thanks to the Foundation's efforts - they are already operating in 12,000 locations in Poland. It means, every third entrepreneur accepting cashless payments in our country received a payment terminal under the Program. Its beneficiaries include small, medium and micro enterprises and public administration entities. The success of the Program is also evidenced by gathered stories of entrepreneurs. They emphasize that installing payment terminals opened their businesses to new customers who more and more often want to pay digitally. Program participants themselves encourage other entrepreneurs to accept cashless payments. 2 part of the panel (45 min) The second part (45 min) is designed to engage onsite and online auditorium into discussion. Moderators will choose questions to either one or all of the speakers, as well as motivate participants to present their insights, desirably different from those presented by invited speakers. To facilitate the discussion, there will be an online app with questions for the auditorium. Answers will be gathered ad presented in real time, anonymously. Presented answers will be used as an additional impulse for the participants to participate in the discussion.
