The Electronic Payment System
An Assessment of Benefits for the US and State Economies
Published on October 30, 2015
"Electronic payments are highly efficient, offering advantages such as speed, reduced costs, and accuracy," said Dr. Ray Perryman, President and CEO of The Perryman Group. "These enhancements have contributed significantly to the expansion of the US economy, increasing liquidity and stimulating personal consumption."
An easy to use, efficient method of purchasing goods and services is essential to a well-functioning economy. Payment methods have evolved throughout human history, from barter to primitive forms of money, to full-bodied coins and precious metals, to bank notes, to national fiat currency and checks. Each advance has brought with it more economic efficiency, productivity, and integration.
The electronic transaction payments system has enhanced efficiency by acting as a convenient method of payment, reducing payment processing costs and time, providing greater payment security, establishing globally accepted forms of payment, and creating greater transparency. All of these benefits generate economic growth in a number of ways.
Compared to the results if no such system existed, electronic payment systems have led to gains in business activity in the United States for 2014 of an estimated $1.760 trillion in gross product and almost 23.2 million permanent jobs. Looking over the entire 1970 to 2014 period, the cumulative increase in gross product is $34.314 trillion in gross product and 387.5 million person-years of employment (which is simply one person working for one year).
To put the economic benefits of the electronic payments system and associated efficiencies in context, they increased the size of the US economy by more than 12% (as measured by gross product as of 2014), increased personal consumption expenditures by almost 17%, and raised employment by 20%. "The electronic payments system is the force behind one in five jobs because employment in the United States is 20% higher than it would be if the system had never existed," said Dr. Perryman. "Also, future advances stand to increase the benefits of the system over time."
Focusing on the benefits of the increased usage of electronic payments from 2004 to 2014 (the debit-card era), The Perryman Group found gains in business activity of $432.927 billion in gross product and nearly 5.7 million permanent US jobs for 2014.
"In short, the electronic payment system enhances efficiency by making payments faster and easier," said Dr. Perryman. "As a result, consumer spending has been enhanced, production has been facilitated, and the economies of the US and every state have been able to grow at a faster pace than they would have otherwise."
For more information, please refer to the following resources:
- Report (PDF)
- [Infographic] Electronic Payments and the US Economy: Adding Jobs and Growing the Economy (www.perrymangroup.com)
- [Infographic] Electronic Payments and the US Economy: State Impacts (www.perrymangroup.com)