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Effect of Plastic money on global economy


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Effect of Plastic money on global economy

  1. 1. The plastic money in the economy and its impact on the speed in economic activities Presented by: Nivedita .S Zeba Rana Chayya Singh Sukhwinder kour bariar
  2. 2. What is plastic money? hard plastic cards that we use in our day to day in option of the actual blank notes
  3. 3. Types of Plastic Money Pre-Paid cash cards Cash Cards Debit Cards Credit cards
  4. 4. CASH CARD:-Allows you to withdraw money directly from your bank via an Authorised Teller Machine (ATM) but it will not allow the holder to purchase anything directly with it. DEBIT CARD:-This type of card will directly debit money from your bank account, and can be used to purchase goods and services. If an overdraft facility is available then the limit will be to the extent of the overdraft . CREDIT CARD:-This card permits the card holder to withdraw cash from an ATM, and allows the user to purchase goods and services directly, but unlike a Cash Card the money is basically a high interest loan to the card holder, although the card holder can avoid any interest charges by paying the balance off in full each month. PRE-PAID CASH CARDS:-As the name suggests the user will add credit to the card themselves, and will not exceed that amount. These are usually re-useable .However some cards, usually marketed as Gift Cards are not re-useable and once the credit has been spent they are disposed off.
  5. 5. MERITS OF THE PLASTIC MONEY Convenient and saves Time of the customers. Increases purchasing power and need not to carry hard cash. Consumers spend an average of 68.5% more when they pay with a credit card instead of cash. This increases the sale of the retailers. Banks earn interests and also charge late payment fees
  6. 6. ECOMONIC CYCLE CONSUMPTION Greater Income Decline in Inventory Increased production More Jobs
  7. 7. Impact of electronic payment on economic growth Rising card payments drive economic growth Value derived from the migration to electronic payment Card penetration The macroeconomic impact of card usage The value of card payment
  8. 8. Rising card payments drive economic growth    Global economic growth -$983B(2008-2012) Electronic payment contributed to – Emerging markets – 0.8% increase in GDP Developed markets-0.3% increase in GDP Card growth boosts recovery
  9. 9. Real Global GDP 63 62 61 60 59 Real Global GDP 58 57 56 55 54 2009 2010 2011 2012 REAL GLOBAL GDP
  10. 10. $ 30.32 tril $ 26.99 tril 2.9% Total Compound Annualized Growth rate 7.7% Compound Annualized Growth rate 2012 2008 GLOBAL RETAIL PURCHASES PAYMENT BREAKDOWN(in U.S$)
  11. 11. Value derived from the migration to electronic payment Factors :  Higher potential tax revenue  Lower cash handling cost  Guaranteed payment for merchants  A reduction in the gray economy due to lower unreported cash transaction.  Greater financial inclusion
  12. 12. Card penetration Real private consumption was modeled as a function of real disposable income, real interest rates and speeding using cards as a share of overall consumer expenditure .
  13. 13. The macroeconomic impact of card usage      The card usage in 2003 was 7.7% which has drastically increased to 32% in 2012. Private consumption Card penetration as a percent of total PCE The growth of card usage GDP growth due to card usage
  14. 14. The value of card payment      Less friction more efficiency Card benefits all parties(consumer, merchant, bank ) Security Convenience Transparency
  15. 15. Facts and figures  Consumption of plastic money in india 2008 2010 2011 2012 • 0.02  2009 • 0.00 • 0.02 • 0.05 • 0.09 Largest usage of plastic money(2008-2012) by following countries. China – 4.89% avg Chile- 1.28% avg Brazil- 1.15% avg
  16. 16. Conclusion      Card makes economy more efficient Actual currency in circulation reduces Penetration increases impact on GDP and consumption increases. Cards reduces transactional and opportunity cost. Enhance economic growth and reduce friction.