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The widespread, almost all-encompassing use of credit cards today means plastic money has become a part of life that’s taken for granted by the millennial generation. A few older heads still remember what times were like in the days without credit cards. How bothersome and inconvenient transactions were in those days. How visits to the bank were staple fare at least every other week, visits that were as necessary as they were frustrating. All that changed though, with the arrival of credit cards.
The sheer convenience is in itself reason enough for the popularity of credit cards. There’s also the safety factor and a whole lot of other benefits that have made credit card usage so popular. This is, however, a very micro viewpoint. Credit cards have a strong effect on the economy of both the USA and the world in general.
Impact of Credit Card Processing on the Economy
The credit card is no ordinary monetary tool. It was a means of empowerment for a generation, and the numbers play out to prove just that. But before getting to that, it is imperative to understand how credit cards function. A study conducted by the US Department of Commerce’s International Trade Commission found that from the period between 1999 and 2004 credit card payments have grown by a massive 11.8%.To provide some perspective, that’s a growth of a whopping $33.4 billion in the United States.
And the trend hasn’t bucked after that either. A study conducted by Moody’s Analytics for Visa found that from the period of 2008 to 2012, “Greater usage of electronic payments added $983 billion in global economic growth.” According to the same study, “cumulative contribution to GDP growth from greater card penetration” in the US stood at $127.4 billion during this period. The widespread use of credit cards has left and continues to leave a massive imprint on the global and national economy.
There’s a multitude of reasons why credit cards have gained such extensive popularity. After all, the credit card does offer a variety of benefits.
Benefits of Credit Card Processing to Citizens
Imagine a time a few decades ago. You had to plan ahead of every purchase, and if you saw something you liked but didn’t have any cash on you, the process that followed was tedious. Go back to the bank or home, collect money, return to the store and then make your purchase. This meant holding higher physical cash reserves at home, and carrying valuable paper money around on your person. This in turn led to issues of safety and security.
But the arrival of the credit card has changed it all. People could make their purchases using the card, and even had the flexibility of canceling transactions if they changed their minds.
Apart from this, traveling abroad ceased to become an issue as well, because with credit cards being accepted globally, there was no need to find and visit currency exchange centers or worry about the global currency rates. And today, in the world of online shopping, a credit card is an absolute must. Using the credit card, people make purchases remotely and have these purchases delivered, turning the traditional shopping model on its head.
Benefits to Merchants
Through merchant credit card processing, business owners too have thrived. Firstly, by choosing to accept credit cards, they have expanded their horizon in terms of channels for revenue flow. Secondly, credit cards are a much faster method of payment, and quicker payments result in quicker rotation and happier customers.
Having a presence online is almost impossible today without credit card processing, so traders that have ventured into the online shopping world have credit card processing to thank for their success. The fact that credit card companies provide detailed financial records has also allowed business owners insight into their business trends like popular products, target market and other such useful information. Allowing credit card payments have also reduced actual cash transaction, making the logistics of transferring earnings into bank accounts that much easier for business owners.
Love it or loathe it, you can’t deny the influence of credit cards on the way we do business. And taking into account the convenience and the financial protection they provide to users, along with the boost it has been giving to economies the world over – long may it continue!
Jordan Greer is a pro gamer, a baker, and a tech-savvy entrepreneur with an insatiable appetite for the good life. Follow him on Twitter @jordan__greer