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Company : Business Wire 
Tuesday, September 28, 2004 11:29AM IST (5:59AM GMT)
Governments Drive Modernisation and Transparency with Electronic Payments; New Paper from Visa International and Commonwealth Business Council Delivers Blueprint to Strengthen Government, Foster Economic Growth and Empower Citizens
London, United Kingdom

Efficient and effective payment systems are vital for economic modernisation and can be implemented in highly targeted and cost-effective ways, says a new paper launched Monday by Visa International and the Commonwealth Business Council. According to the paper, the electronic payments revolution that transformed consumer spending in many countries and boosted the global economy can be expanded to provide significant benefits in developed and developing countries around the world and draw two billion unbanked citizens into mainstream financial services.

The paper, entitled "Payment Solutions for Modernising Economies," highlights key ways in which the move from cash to electronic payments can generate major returns to governments and their citizens, and it offers a primer on how to address infrastructure and institutional challenges. With a unique collection of real-world examples, the paper documents how governments can reduce costs, stimulate economic growth and strengthen local banking systems.

"Moving from cash to electronic debit and prepaid payments accelerates economies. It is like going from walking to riding a bicycle. Adding credit is like adding gears to the bicycle," said Christopher Rodrigues, president and CEO, Visa International. "Electronic payment systems have transformed our lives and boosted the global economy by giving nearly a billion consumers a fast, efficient and safe way to pay for goods and services. Now, as governments and enterprises extend the reach of electronic payments, we see rapid continued growth toward two billion electronic payment users, worldwide."

Dr. Mohan Kaul, chief executive of the Commonwealth Business Council, noted, "This paper provides an important resource to help raise awareness and understanding in the area of electronic payments, particularly for emerging markets that are embracing leapfrog technologies to drive growth. It provides an effective overview of real challenges and practical advice."

A Blueprint for Governments

The paper makes several important new contributions to public understanding of financial services and development. The paper advances an essential argument in the debate about driving economic modernisation and bridging digital divide issues: governments can deploy tailored electronic payment initiatives for specific stakeholders or geographies, allowing infrastructure, education and adoption issues to be resolved in targeted and cost-effective ways, with maximum return.

To make this case, the paper clarifies the components of electronic payment systems from the point of view of international payment networks. It then reviews findings from a growing body of literature that attempt to quantify the substantial economic impact of card-based and other electronic payment systems. The paper goes on to outline specific strategies that governments can use to extend payments infrastructure domestically and update public institutions to balance the needs of all stakeholders and provide proper public oversight. An entire section covers specific examples of innovation in action, and the paper offers a checklist-style guide to move from concept to execution.

Added Rodrigues, "Our goal was to give leaders a blueprint for the transition from cash to electronic payments. By including examples of innovation, we hope that governments, enterprises and consumers will recognise that the transition can be more beneficial and even easier than they may have thought."

Innovation in Action

The paper and a library of case studies of innovation in action are available at www.visa.com/modernisation. There are five categories of emerging examples that they detail:

-- Generating government efficiency. Governments are often the single largest purchaser of goods and services in their economies and represent some US$10 trillion in payments per year worldwide. The paper shows several examples of how governments are driving savings in their travel and procurement, as well as improving collection of taxes and fees, by turning to international payments networks.

-- Banking the unbanked. Governments can play a direct role in bringing the safety, convenience and efficiency of electronic payment to the more than two billion unbanked individuals worldwide that form the so-called "bottom of the pyramid." The paper shows how governments are using electronic payment systems in conjunction with distribution of payrolls, pensions and public assistance benefits to retain funds in the banking system, reduce informal economies and allow more citizens access to basic financial services.

-- Enabling cross-border remittances. The paper outlines new technologies that can create secure, cost-effective channels for the transfer of worker and other person-to-person remittances, estimated at US$93 billion to US$150 billion or more. Cross-border remittances can be costly, and they pose a challenge to unbanked individuals. Many recipients, for instance, need to travel long distances to queue at a cashier and then must protect themselves and their cash from thieves. Card technologies can reduce costs and improve security for senders and recipients while helping governments retain control of foreign exchange within the formal economy.

-- Driving small business growth. Small and medium-sized business account for more than 95% of all enterprises and the majority of employment in most countries, but they stumble over cash-flow and are more able to succeed when they have better access to credit and customers. The paper points out examples of how electronic payments can build small business revenues through sales growth, improve profitability by reducing operational costs, and provide governments and banks more efficient and controlled channels for providing working capital to fund small business growth.

-- Stimulating travel and tourism. The travel and tourism industry is a key driver of economic growth in many countries, and international tourism is expected to double to US$1.4 trillion over the next decade. The paper covers how international payment brands make it easier for governments to develop and assess tourism, promote tourist expenditures and support the travel industry.

Interest From Economic Development Officials

The CBC and Visa produced the paper based on growing public sector interest in new strategies to harness technology for economic modernisation. Although the World Bank and other institutions have produced various materials and studies on the importance of modern financial services and payments infrastructure, the CBC-Visa paper provides a new level of practical detail. The paper serves as a timely response to the needs of finance ministers, economy ministers and others participating in national and multilateral discussions about how to stimulate economic modernisation and growth. In particular, this paper serves as a timely intervention on the eve of the Commonwealth Finance Ministers' Meeting, which will specifically address these topics.

Notes to Editors

About the Commonwealth Business Council

The Commonwealth Business Council (CBC) is dedicated to the promotion of economic growth through international trade and investment. The 53 Commonwealth nations make up 40% of the World Trade Organization and comprise more than 17,000 listed companies. Language, legal and administrative affinities make it one of the most coherent and powerful trading blocs in the world. More information is available at www.cbcglobelink.com.

About Visa

Visa is the world's leading payment brand generating more than US$3 trillion in annual card sales volume. Visa has unsurpassed acceptance in more than 150 countries. The Visa organization plays a pivotal role in developing innovative payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. Visa is a leader in Internet based payments and is pioneering the creation of u-commerce, or universal commerce--the ability to conduct commerce anywhere, anytime, and any way. For more information, visit www.corporate.visa.com.

Copies of the white paper and case studies may be downloaded at www.visa.com/modernisation.

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