E-payments and economic growth: the rise of cashless society in ASEAN nations

Abstract

Digitisation is changing the way people pay. In ASEAN, the payments sector is an integral part of banks' services and an open playing field brimming with innovation and competition. The competitive landscape is driven by adoption of multiple mobile and lifestyle consumer-centric platforms offered by banks and fintech players. ASEAN being one of the fastest growing regions in the world, we would like to find out if the rise of e-payments has contributed to the region’s steady growth over the decade. This study aims to examine the relationship between retail payments and the aggregate macroeconomic activity in ASEAN nations. Using data from across 5 ASEAN markets over the period 2012 to 2021, the results suggested that the move from paper-based towards e-payments can stimulate the overall economy. Among different payment instruments, this relationship is strongest for credit transfer payments, followed by credit cards. On the other hand, debit card and e-money payments are found to have no significant macroeconomic impact.