The Catalyst in Our Wallets: How Card Payments Shape the UK Economy
Swipe, insert, tap — the simple actions we perform with a credit card are more than just routine transactions; they are the cogs in the UK’s economic machine. The latest figures from the Office for National Statistics (ONS) show that 57% of consumer spending is made through debit and credit cards, proving their standing as the lifeblood of the modern marketplace. And now, a new report from EY, backed by Mastercard, entitled “Economic contribution of card payments to the UK economy,” quantifies just how significant this contribution is.
The Numbers Tell a Story Delving into the data, the report presents an impressive narrative: for every one per cent increase in card penetration, there’s a corresponding 0.12% uplift in GDP per capita within OECD countries. For the UK, where card penetration stands at 57%, this has translated into an estimated contribution of up to 6.5% of GDP in 2022 — that’s up to £161 billion. To put it into perspective, that’s akin to the combined employment figures in the finance, insurance, and real estate sectors.
More Than Just Numbers: Real Economic Impacts The report goes further to explain how card payments have a positive impact on GDP. By minimizing transactional costs, they unlock consumer spending, leading to additional economic ripple effects. Furthermore, a high card penetration aligns with increased consumer satisfaction and competitiveness in the global market. It achieves this by smoothing out payment frictions and enhancing the security, stability, and transparency of the entire payment network.
The SME Perspective: Agility in Transactions From the viewpoint of small and medium-sized enterprises (SMEs), cards are a boon, granting immediate and full access to funds from customer purchases, and offering a secure pathway for payments through the supply chain. This accessibility is invaluable in today’s fast-paced, digital-first economy.
UK’s Financial Services: At the Forefront of Innovation Card payments are emblematic of the UK’s prowess in financial services. They reflect a harmonious blend of entrepreneurial spirit, advanced technology, and supportive regulation that positions the UK as a leader in fintech and payments innovation. Thanks to cards, we’ve witnessed the rise of mobile wallets, contactless payments, and cutting-edge fintech startups — a trend that policymakers and regulators are keen to continue nurturing.
Beyond GDP: A Tool for Inclusion and Growth But the influence of card payments stretches beyond GDP figures. They are pivotal in driving financial inclusion, empowering consumers, and enabling SMEs to flourish through improved efficiencies and customer insights, as highlighted by various case studies in the report.
In Conclusion Cards are more than a payment method; they’re a gateway to economic prosperity and quality of life enhancements for both consumers and businesses. Their critical role in the payments landscape underscores the necessity of fostering the UK’s fintech sector as an area of priority.
Discover More For readers seeking to delve deeper into the profound effects of card payments on economic growth, Payment Solution Guy provides insights, data, and analysis on the evolving landscape of financial transactions. Join the conversation on how we can continue to harness the power of card payments for the UK’s economic advantage.
Article Source – https://www.mastercard.com/news/europe/en-uk/research-reports/the-economic-contribution-of-card-payments-to-the-uk-economy/