Leaders of nations are wondering if digital payment solutions have an impact on a country’s economic growth.
Knowledge of its impact on a country’s economy will assist policymakers and leaders in making informed decisions on the digitalization of the financial services sector, and it will provide the general public with a clear vision of the technology.
In 2022, there were 3.7 billion real-time digital transactions in the Nigerian economy, according to a report released by ACI Worldwide in collaboration with Global Data. This represents an increase of around 0.67% in terms of GDP growth. There is no doubt that the full implementation of digital payment systems would have a significant effect on Nigeria’s economic growth.
Here are some ways that digital payment methods impact a nation’s economy.
It reduces the costs associated with cash transactions.
The truth is that cash is inherently problematic; from production to handling to transportation and storage, it presents a slew of potentially costly issues. The cost of printing fiat currency is high due to the costs of machinery, labor, tools, and materials. Transporting and protecting large sums of money from road robbers all require significant capital. It is no longer necessary to print, transport, or store cash because digital payments use digital processes instead, reducing the problems and economic effects of cash.
It increases the financial inclusion of a country.
It improves a country’s financial inclusion. Financial inclusion is a global goal that aims to provide people with access to financial services and systems. More banks would need to be established in the most remote parts of the world to achieve this goal, which is neither feasible nor sustainable. The use of digital solutions makes it easier to financially include more people. This increases people’s participation in the economy, which leads to economic growth.
The convenience and speed lead to more participation
Digital payment makes transactions faster, easier, and more convenient, encouraging individuals and business owners to engage in more financial activities. The more financial activities there are, the greater the benefits to the national economy as a whole. When people embrace digital payment solutions, it can have a significant impact on a country’s economy.
Entrepreneurs, businesses, and other stakeholders are connected through it.
Entrepreneurs now have access to a wide range of financial options thanks to digital technologies. They acquire access to the full banking, supply, and customer ecosystem. This program’s funding enables economic growth and startup businesses to thrive. Digital solutions increase the economy by giving business owners the ability to get around some limitations and provide them access to the global market.
The system improves government transparency.
Corruption has been widespread in society, and the majority of it cannot be traced or reduced due to failed systems. Data from government payment systems can be captured electronically, reducing high-level government officials’ theft.
Advancement and economic expansion have resulted from innovative payment methods. Understanding how it stimulates economic growth will persuade countries to adopt it.
