By Dan Muhuni
Crime rate in the country is poised to decrease once people adopt plastic money methods. This was said by the Permanent secretary in the Ministry of information and communications during a breakfast meeting on economic benefits of electronic payments.
Jabu Basopo, Head of Business Development for Visa, Sub-Saharan Africa, said that for growing economies like Kenya, where transactions have traditionally been done in cash and cheques, the use of electronic payment systems can bring many benefits onboard.
According to an international research, an electronic payment system in general costs in the range of one half to one third of a paper-based system. Electronic payment networks have the potential to provide cost savings of at least one per cent of Gross Domestic Product (GDP) annually over paper-based systems through increased velocity, reduced friction and lower costs.
Electronic payments can therefore have a positive impact on Gross Domestic Product growth, said Basopo during a Visa briefing for business, government, financial services.
Global Insight, an international economic and financial analysis consultancy, estimated that increasing the share of electronic payments in the US by 10% could generate an increase of 0.5% in consumer spending and up to 0.5% in GDP growth. 2
Basopo highlighted the benefits of cashless payments for both governments and consumers, saying that electronic payment systems can significantly lower transaction costs, improve financial transparency, increase government efficiency and bring people into the banking system, thereby boosting economic growth. “Cash is costly and risky, per payment costs are high and remain high because cash has to be minted, printed, secured, counted and transported, whereas electronic systems have fixed costs and per payment costs reduce with volume,” said Basopo.
Prepaid cards present an ideal route to bring previously unbanked people the benefits of electronic payments. “Building on the success of other prepaid services, such as mobile phones, we believe prepaid cards are just what is needed to ensure safe, affordable banking for those who previously were unable to access or afford financial services, for whatever reason,’ said Basopo. “We also believe that we have to be innovative when it comes to product development by offering our customers safe alternatives to cash.”
The prepaid debit card is well suited for a wide range of consumers, including: people with irregular income (for example contract and part time workers), those who cannot access traditional banking products, those who want to replace cash or cheque payments with a suitable alternative, or want to receive electronic payments without opening a traditional bank account.
Electronic payments facilitate generating revenue from tourism, since international travellers have a convenient method of paying, without struggling to obtain foreign exchange.
Through its Financial Literacy Programme, Visa has partnered with government and financial institutions across Sub-Saharan Africa to educate stakeholders and consumers and bring more people into the banking system. This empowers consumers by facilitating access into the mainstream economy and offers the convenience and efficiency of using cards. Visa continues to work with its client financial institutions to provide access to electronic payments and help economies grow in Sub-Saharan Africa.
