According to the Public Relations of the Monetary and Banking Research Institute, the latest expert report on "The role of digital acceptance in linking the development of the payment industry and economic growth" was published. The report’s introduction states: "Adequate infrastructure for the payment industry is essential to increase the efficiency of financial institutions and financial markets, gain consumer confidence, and facilitate economic interactions and trade in goods and services." (Hassan et al., 2013; Kokula, 2011; Payment and Settlement Committee, 2003). As Humphrey (1996, p. 914) writes, "a country's payment system is what makes real and financial markets work." However, this system has not received much attention from economists (Kahn and Roberts, 2009). In the theoretical discussion and statistical studies, the present article examines the relationship between the development of the payment system and the real sector with an emphasis on the role of digital acceptance.
Syracino and Gracia (2008) describe the payment system as the infrastructure (including institutions, tools, rules, processes, standards, and technical tools) designed to exchange the value of money between parties to meet mutual obligations. According to them, by comparing the cost of transactions and related risks, the infrastructure can be classified in terms of technical efficiency, and a measure of the level of development of the payment system can be obtained. The first question of the present study is to examine the relationship between the level of development of the payment system and the real sector of the economy. According to the literature, the need to reduce transaction costs and technical and technological advances have been the two drivers in the development of payment systems. Historical experience shows that the existence of such needs, along with technical advances in this field, has made possible the realization of new systems. In this research, on the one hand, we explain the theoretical position of the payment system in financial development and its relationship with economic growth and the development of information and communication technologies and new approaches in the digitalization of processes. On the other hand, we examine the empirical relationship between the evolution of development indicators in this system and economic growth.
The second question of this research is the role of digital acceptance in the relationship between the development of the payment industry and economic growth. The important question in this section is whether the improvement of digital acceptance indicators, which indicates the widespread use of this technology in a country, can strengthen the link between the development of the payment industry and economic growth or not? The answer to this question is essential because the improvement of this index can be a good policymaking goal for decision-makers, not only to emphasize the development of payment industry infrastructure but also to focus on demand-side factors, especially the promotion of digital acceptance indicators, especially in less developed areas.
In the last two decades, one of the main goals of macroeconomic policymaking, namely the creation of sustainable economic growth, has been accompanied by two other developments: the digitalization and development of the financial system. This issue is more pronounced in developing countries; Thus, the relationship between the payment system and the real sector of the economy can be examined in terms of financial development and the growth of ICT, and digital acceptance.
The history of the relationship between financial development and economic growth is relatively old in the literature. Part of the literature points to a positive relationship from financial development to economic growth (Goldsmith, 1969; Levine, 2001, 2005). The channel introduced in this regard is increasing economic activity, productivity, and capital formation in economies with more developed financial systems. While Miller (1998, p. 14) writes: "The role of financial markets in economic growth is so clear that it should not be taken seriously," others argue that this statement is incorrect and causation direction has not been properly identified.
For example, Robinson (1952, p. 86) points out that there is a relationship between financial development and economic growth, but that financial development occurs in response to "real sector" demand and is not itself a factor in economic growth (Levin, 2005; Zagorchev et al., 2011). When analyzing newer concepts such as information and communication technology or process digitization, we come across newer literature because these concepts are relatively new in principle. Jorgensan (2001) concludes that lower commodity prices (computers and semiconductors) increase productivity growth at the industry level. Other studies point to the positive role of new technologies in communication and information in increasing productivity. Of course, the definition of technology is different in this literature, regardless of the almost identical overall result. Studies focus on wireless communications, or the Internet, or the computer industry, including hardware and software, and so on. These studies are also conducted at the enterprise, industry, or country level (see Cardona et al. (2013) for reviewing the literature).
The third type of interaction in the subject matter is defined between financial development and new technologies. The literature in this area also refers to the bilateral causal relationship. An efficient financial system can facilitate the process of introducing new technologies (Levin, 1997), although some of these imported technologies can belong to the field of IT or ICT, etc. On the other hand, the impact of new technologies on financial development is more relevant to developing countries and focuses on the discussion of financial inclusion (see Chamio et al. (2019) and Bansal (2014)).
Based on the relationships described, the theoretical part of this study emphasizes payment system development in financial development. It means that we follow the relationship between the payment system and economic growth through its association with financial development and new technologies and their acceptance status. Following this indirect relationship between the development of the payment system and economic growth, in the experimental section, we discuss the significance of the coefficient of different indicators of the development of the payment system on economic growth. Given that this issue requires the introduction of indicators of payment system development, therefore, one of the subsections of this article is devoted to the introduction of this concept. After statistically explaining this relationship, the role of digital acceptance in estimating regressions is investigated.
Also, in the concluding section of this expert report, it is stated: The relationship between the payment system and economic growth and prosperity in recent years was less considered by the mainstream in economics. The reason for this can be considered the dominance of fundamental concepts such as "financial development" and "technology growth" in the field of economic growth models, which is conceptually very close to the growth of the payment system, and paying attention to such concepts reduces the need to independently examine the impact of payment system development. This study was conducted to take a closer and more detailed look at the infrastructure of the payment industry and its impact in the light of these important but general concepts.
Based on the results of estimating interstate models, it can be concluded that the development of payment industry infrastructure has a significant effect on the growth of the real sector of the economy. Of course, the indicators that have a significant effect on economic growth include the ratio of non-cash non-check transactions to GDP, the share of checks in non-cash transactions, and the ratio of the Internet and mobile banking transactions to GDP. However, no significant effect was found for the variables of total non-cash transactions to GDP and the number of poses. Considering the significance and sign of the variables, it can be said that the expansion of non-cash instruments and the reduction of cash use in payments can only lead to economic growth if it is accompanied by the development of high-performance non-cash instruments (i.e., Internet Banking and Mobile Banking). Also, moving from inefficient tools to more efficient tools (e.g., reducing the share of checks) can have a positive and significant effect on growth.
Besides, the effect of the ratio of banknotes and coins in the hands of individuals to M1, which somehow shows the extent to which people use cash instruments in payments, also has a negative and significant effect on economic growth. It means that as more non-cash instruments increase and the development of the payment industry in a country increases, the share of banknotes and coins also decreases, leading to economic growth through the channel of reducing transaction costs.
It should be noted that the above interpretation of experimental tests is associated with limitations. The most important is the ambiguity of the causal cycle. Is it the development of payment systems that generates economic growth or a broader Schumpeterian interpretation of the issue with a greater need to reduce transaction costs in the process of economic growth and capital accumulation and demand for technical innovation in the payment industry, and entrepreneurs’ economic incentives complement technical advances and innovation in the payment industry is realized, and its use in the economy is disseminated?
Following the initial results of the study on the importance of the efficiency of payment instruments, in this study, the mutual relationship between the development of the payment industry and the acceptance of the technology was also examined. Accordingly, the relationship between the payment system development index (the number of banknotes and coins in the hands of individuals to M1) and economic growth was assessed separately in countries with low, medium, and high levels of digital acceptance. According to the results, more digital adoption will lead to a positive relationship between the development of the payment system and economic growth.
In this study, various aspects of industry development were introduced, the status of existing statistics, and also the status of Iran among international economies were examined. According to available statistics, although in the last 10 years the country's payment industry has improved in terms of all indicators, this progress in some areas has been commensurate with other countries and in some areas has been less than similar countries. Some of the challenges that can be addressed by looking at the payment industry statistics are:
· Considering that the use of RTGS in macro payments has grown in the country, but compared to other countries, the share of old settlement systems in macro payments in Iran is still high.
· Excessive increase of Point of Sales (POS) devices, which indicates a kind of bias in the expansion of infrastructure and waste of resources, and shows the need to integrate these devices.
· Despite the significant growth in the share of new payment instruments such as the Internet and mobile banking transactions, we are still lagging behind other countries in this index.
· The share of checks as the least efficient non-cash payment instrument of the total non-cash transactions in the past decade has decreased significantly. However, observations of statistics from similar countries show that this ratio is still high in Iran.