IGF 2020 WS #310 How digital payments support inclusive economic growth?
The role of digital payments and their contribution to inclusive economic growth was addressed on the last day of IGF, supported by VISA, under moderation of Ms Nell Przybylska (PR and Communication Manager, Digital Poland Foundation). In addition to discussing the general theme, the session brought forward examples from digital payment experience in Poland.
Consequences for developing markets
It is evident that digital payments are significant in developing markets. According to Mr Konrad Slusarczyk (Senior Policy Lead CEE, VISA), countries with developing markets, in particular, can acquire considerable GDP gains. Since some 40% of the adult population globally does not have access to a bank account, opening a business becomes much easier through the use of digital payments. Digital payments thus improve financial inclusion.
Available Internet infrastructure
While Mr Pawel Widawski (Vice President, Cashless Poland Foundation) stressed the need for an Internet infrastructure, without which one cannot make electronic transfers of funds, Mr Willem Pieter de Groen (European Credit Research Institute) said that a basic tool (a mobile phone) is sufficient to get the benefits.
Co-operation among stakeholders
The need for public-private partnerships and co-operation among the stakeholders was raised by several speakers. Widavski brought up the fact that common standards are necessary to efficient implementation and development in payment infrastructure. Standards are a crucial element in financial services, including payments. They are essential for cross-sectoral and cross-stakeholder group cooperation, and so developed standards provide added value to the whole economy. Having everybody included in the system was raised also by Mr Killion Munyama (Member of the Polish parliament). De Groen called for more public-private partnerships.
Poland is not a wealthy country, but it is a very successful country in building payment infrastructure—not because of specific regulations, but because of co-operation at many levels. It is essential for policy makers to build a good framework for co-operation.
Role of government
Munyama concentrated on the role of governments and their potential measures for aiding both economic growth and economic distribution. Access to finance is a prerequisite for poverty reduction and sustainable development and four pillars of inclusive growth need to be addressed: economic growth, equity, accessibility, governance and governance effectiveness. He called for government policies on both the demand side (such as cutting taxes and lowering interest rates to encourage spending) and the supply side (development of new technologies to contribute to increased productivity, new management techniques, focus on education, more flexible working practices).
Clearly, governments have definite stakes in digital payments. As de Groen stated, in many countries increased digitalisation of payments often automatically leads to recording of these transactions (it becomes more difficult not to declare a transaction) and an increase in taxes. Income from taxes is not negligible, as Slusarczyk confirmed. He also encouraged governments to support acceptance of cashless digital payments by entrepreneurs. Development of a Cashless Poland programme, as an example, was very successful in this regard.
Not only payments
De Groen stressed that financial inclusion means not only having access to payments, but also to savings accounts. It also improves access to credit, where in most countries only part of the population has access to credit. Digital payments make assessment of credit worthiness easier and so a larger group of people can access credit.
People with disabilities also benefit from digital payments, but it is necessary to ensure that digital technologies are accessible to all. And for those who are not familiar with digital technologies, we need to ask what solutions can be provided for them.