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

What is plastic money?

hard plastic cards that
we use in our day to
day in option of the
actual blank notes

Types of Plastic
Money
Cash
Cards
Debit
Cards

Credit
cards

Pre-Paid
cash
cards

SH CARD:-Allows you to withdraw money directly from your

nk via an Authorised Teller Machine (ATM) but it will not allow th

der to purchase anything directly with it.

BIT CARD:-This type of card will directly debit money from

r bank account, and can be used to purchase goods and services

n overdraft facility is available then the limit will be to the exten
he overdraft .

EDIT CARD:-This card permits the card holder to withdraw

h from an ATM, and allows the user to purchase goods and

ices directly, but unlike a Cash Card the money is basically a hig
rest loan to the card holder, although the card holder can avoid
rest charges by paying the balance off in full each month.

-PAID CASH CARDS:-As the name suggests the user

add credit to the card themselves, and will not exceed that amo
se are usually re-useable .However some cards, usually marketed
ift Cards are not re-useable and once the credit has been spent
y are disposed off.

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

ECOMONIC CYCLE

CONSUMPTION

Greater Income

Decline in
Inventory

Increased
production

More Jobs

Impact of electronic
payment on economic
growth
Risingcardpaymentsdriveeconomicgrowth
Valuederivedfromthemigrationtoelectronic
payment
Cardpenetration
Themacroeconomicimpactofcardusage
Thevalueofcardpayment

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

Real Global GDP

63
62
61
60
Real Global GDP

59
58
57
56
55
54

2009

2010

2011

2012

REAL GLOBAL GDP

$ 30.32 tril
$ 26.99 tril
Other 21.2%

Other 20.9%

Check 9.5%

Cash 42.2%

Card 27.4%

2008

2.9%
Total
Compound
Annualized
Growth rate

Check 7.7%

Cash 38.3%

7.7%
Compound
Annualized
Growth rate

Card 32.8%

2012
GLOBAL RETAIL PURCHASES PAYMENT
BREAKDOWN(in U.S$)

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

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 .

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

The value of card payment

Less friction more efficiency

Card benefits all parties(consumer, merchant,
bank )
Security
Convenience
Transparency

Facts and figures

Consumption of plastic money in india

2008
0.02

2009
0.00

2010
0.02

2011
0.05

2012
0.09

Largest usage of plastic money(2008-2012)

by following countries.
China 4.89% avg
Chile- 1.28% avg
Brazil- 1.15% avg

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.

Th a

you

nk