Economy
Study Shows Economic Benefits of ‘Cashless Cities’
By Modupe Gbadeyanka
Visa has announced results of an independent study conducted by Roubini ThoughtLab and commissioned by Visa examining the economic impact of increasing the use of digital payments in major cities around the world.
The study estimates that relying more on electronic payments, such as cards and mobile payments, could yield a net benefit of up to $470 billion per year across the 100 cities studied – roughly the equivalent to 3% of the average GDP for these cities.
“Cashless Cities: Realizing the Benefits of Digital Payments”, is a unique study that quantifies the potential net benefits experienced by cities which move to an “achievable level of cashlessness”—defined as the entire population of a city moving to digital payment usage equal to the top 10% of users in that city today. The study does not look at eliminating cash. Rather, it seeks to quantify the potential benefits and costs of significantly increasing the use of digital payments.
By reducing reliance on cash, the study estimates the immediate and long-term benefits for three main groups—consumers, businesses and governments. According to the study, these benefits could add up to combined direct net benefits of approximately U.S. $470 billion across the 100 cities that were analyzed:
Consumers across the 100 cities could achieve nearly $28 billion per year in estimated direct net benefits. This impact would be derived from factors including up to 3.2 billion hours in time savings conducting banking, retail and transit transactions, in addition to a reduction in cash-related crime.
Businesses across the 100 cities could achieve more than $312 billion per year in estimated direct benefits. This impact would derived from factors including up to 3.1 billion hours in time savings processing incoming and outgoing payments and increased sales revenues stemming from extended online and in-store customer bases. The study also found that accepting cash and checks costs businesses 7.1 cents of every dollar received compared to 5 cents of every dollar collected from digital sources.
Governments across the 100 cities could achieve nearly $130 billion per year in estimated direct benefits. This impact would be derived from factors including increased tax revenues, increased economic growth, cost savings from administrative efficiencies and lower criminal justice costs due to reduced cash-related crime.
“This study demonstrates the substantial upside for consumers, businesses and governments as cities move toward greater adoption of digital payments,” said Ellen Richey, Visa’s vice chairman and chief risk officer. “Societies that substitute digital payments for cash see benefits from greater economic growth, less crime, more jobs, higher wages, and increased worker productivity.”
As cities increase use of digital payments, the positive impacts can extend beyond financial benefits to consumers, businesses, and government. The shift to digital payments also may have a catalytic effect on the city’s overall economic performance, including GDP, employment, wage, and productivity growth.
“The use of digital technologies—from smart phones and wearables to artificial intelligence and driverless cars—is rapidly transforming how city dwellers shop, travel, and live,” said Lou Celi, Head of Roubini ThoughtLab. “Without a firm foundation in electronic payments, cities will not be able to fully capture their digital future, according to our analysis.”
“Cashless Cities: Realizing the Benefits of Digital Payments” offers 61 recommendations for policymakers to help their cities become more efficient through greater adoption of digital payments. Recommendations include undertaking financial literacy programs to help move the unbanked into the banking system, implementing incentives to stimulate innovation focused on scaling new payment technologies, implementing secure open-loop payment systems across all transportation networks and more.
Visa and Roubini Thoughtlab created an online data visualization tool as a companion to “Cashless Cities: Realizing the Benefits of Digital Payments.” Using the data visualization tool, individuals can increase or decrease the level of digital usage in each of the 100 cities included in the study to better explore the benefits of a world, less dependent on cash. Visit the online data visualization tool and download the report at: www.visa.com/cashlesscities.
METHODOLOGY
Roubini Thoughtlab, a leading economics and evidence-based research firm, surveyed 3,000 consumers and 900 businesses in 2016 across six cities (Tokyo, Chicago, Stockholm, Sao Paolo, Bangkok and Lagos) that represent different levels of digital payments maturity.
These surveys examined the use, acceptance, and cost-benefit impact of physical and digital money. Researchers then extrapolated these survey results based on specific demographic and economic data to another 94 cities around the world to determine the net impact of moving toward a cashless economy on consumers and businesses in each location.
Through other sources, the research was also able to identify expected impacts on government. Researchers used World Bank, Organisation for Economic Co-operation and Development, and other well-respected secondary data sources to augment the survey results and build the overall findings.
An econometric model used by various central banks and other institutions – the National Institute Global Econometric Model (NiGEM) – was used to estimate the “catalytic” impacts (economic growth, productivity, employment and wages) that a move toward digital payments would have on each of the 100 cities analyzed.
Visa commissioned the study. Roubini Thoughtlab independently conducted the surveys, managed the research and developed the analysis.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
By Dipo Olowookere
The escalating tension in the Middle East as a result of the attacks on Iran by the duo of the United States and Israel had little or no effect on the Nigerian Exchange (NGX) Limited on Friday.
The domestic stock market witnessed bargain-hunting yesterday, as investors mopped up equities that could experience price appreciation in the coming days.
Customs Street was up by 0.76 per cent during the trading day, with four of the five major sectors closing in green territory.
The industrial sector appreciated by 3.06 per cent, the banking sector increased by 0.84 per cent, the consumer goods index grew by 0.51 per cent, and the energy segment rose by 0.08 per cent, while the insurance counter lost 0.50 per cent.
When the closing gong was beaten to signal the close of trading activities, the All-Share Index (ASI) advanced by 1,498.54 points to 198,407.30 points from 196,908.76 points, while the market capitalisation gained N962 billion to close at N127.361 trillion compared with Thursday’s N126.399 trillion.
University Press appreciated by 10.00 per cent to N5.50, Guinness Nigeria also soared by 10.00 per cent to N385.00, Royal Exchange jumped 10.00 per cent to N1.87, May and Baker surged by 9.93 per cent to N41.50, and BUA Cement improved by 9.18 per cent to N270.00.
Conversely, RT Briscoe lost 9.17 per cent to trade at N10.40, Learn Africa depreciated by 8.33 per cent to N8.25, NGX Group crashed by 6.12 per cent to N176.50, Haldane McCall moderated by 5.78 per cent to N3.91, and AXA Mansard shed 5.63 per cent to close at N14.91.
Market participants exchanged 591.0 million shares for N35.0 billion in 53,066 deals during the session versus the 549.8 million shares valued at N44.7 billion traded in 55,465 deals in the previous session, representing a spike in the trading volume by 7.49 per cent, and a cut in the trading value and number of deals by 21.70 per cent and 4.33 per cent, respectively.
The activity chart showed that First Holdco, after the sale of 70.8 million units worth N3.5 billion, Access Holdings traded 67.2 million units valued at N1.7 billion, GTCO exchanged 33.6 million units worth N4.0 billion, Ellah Lakes transacted 27.1 million units for N329.2 million, and Sterling Holdings sold 25.2 million units worth N194.6 million.
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