Empowering Economies

Financial Literacy Takes Center Stage In South Africa

Too many people in the world are in debt or struggle to join the formal banking system. For more than a decade, Visa has been developing educational programs that teach important lessons and encourage financial responsibility and inclusion.

In South Africa, which rates low in international surveys on economic literacy, Visa has run a number of successful financial literacy programs using the popular oral storytelling tradition. The program, aimed at unbanked and newly banked people in the country, communicates the importance of financial responsibility through "industrial theater."

Essentially, audiences of low-income South Africans receive financial literacy education through an entertaining play that features two well-known actors. The production focuses on budgeting, what a debit card is and how it works, and fundamental security issues such as keeping your PIN safe. The 35-minute performance is followed by a question and answer session that encourages participation and fosters better understanding. Questionnaire-based research conducted by Visa at shows in 2007 has shown that educating consumers in this manner has a high impact because the audiences both understand and remember the core messages well. Of the 1,646 questionnaires filled in, where respondents answered 10 questions about the content of the show, 93 percent of the answers were correct.

Visa has run a total of 293 shows as of March 2008. The shows have reached 86,308 people in low-income communities across sub-Saharan Africa. In 2008, Visa partnered with the South African Department of Trade and Industry to combine financial literacy and consumer education. The Minister of Trade and Industry, Mandisi Mpahlwa, in March 2008 formally thanked Visa for our contribution to empowering South African consumers.

U.S. State Governments Save Money With Visa

Many people who receive child support, unemployment assistance and other benefits do not have a bank account or access to a payment card. In the United States, Visa estimates there are about 80 million consumers without a traditional banking relationship or access to a payment card. They receive nearly $1 trillion in annual payments and rely heavily on cash for everyday transactions.

The U.S. federal government and more than 30 U.S. states use Visa prepaid cards to deliver vital benefits payments, the advantages of which extend beyond the choice, convenience and security enjoyed by recipients. U.S. taxpayers are indirect beneficiaries, too, since states and federal agencies that have implemented these programs are enjoying significant savings compared with those that still issue checks.

The U.S. General Service Administration (GSA) is the federal agency responsible for managing government spending. It has switched much of its spending away from paper to electronic payments. The results have been impressive. In 2007, $27 billion was spent by 3 million cardholders for spending as diverse as fuel expense and office supplies.2 By converting from paper to electronic payments in 2006, it is estimated that the GSA saved U.S. taxpayers $1.7 billion through reduced paperwork, improved compliance and vendor discounts.3

Improving Economies With Electronic Payments

Cost-effective and adaptable, Visa products bring people into the formal banking system. Not only does this improve individuals' lives, research has shown that every dollar deposited in a bank can boost economic output.4 Less money under the mattress and more in the banking system increases capital and overall liquidity, speeds up access to funds and stimulates economic growth.

Efficiencies over cash- and check-based systems can result in cost savings equivalent to up to 1 percent of gross domestic product (GDP), according to a Global Insight analysis of 50 countries.5 For the U.S. economy, that translates into roughly $60 billion in annual savings.

A study by the Brazilian Central Bank in 2007 found that replacing paper-based payments with electronic methods would result in savings of 0.7 percent in Brazil's GDP ($1.8 trillion in 20076).

Meanwhile, in Canada, electronic payments are estimated to have contributed $122 billion to the Canadian economy in the past two decades. This represents nearly 20 percent of the $631 billion cumulative growth in the Canadian economy over the same period.7