[Bloomberg Adria] Cashless payments are growing at an enormous pace

At the conference on banking and insurance trends organized by Bloomberg Adria, it was emphasized that electronic payments are experiencing unstoppable growth, yet they are still in their infancy and hold tremendous potential. According to the discussions, the shadow economy is declining. In the formally registered economy, it accounts for 12% of GDP and has decreased by five percentage points over the last five to six years. At the level of the entire economy, it stands at about 19% of GDP. Cashless payments, in particular, contribute to its decline.

Marko Danon, an economic development advisor at NALED, stressed the importance of the growing trend of cashless payments for combating the shadow economy and boosting economic growth.

"If Serbia were to reach the average level of cashless payments seen in central and eastern European countries, the budget would be bolstered by an additional 700 million euros annually through the suppression of the shadow economy. According to research by FREN, a one percent increase in the value of electronic transactions reduces the shadow economy by 0.3 percent," said Danon.

Cashless payments are growing at an enormous pace and amounted to 9.5 billion euros last year, representing a 25% increase compared to the previous year. For instance, in 2016, cashless payments amounted to around two billion euros. The average annual growth rate of cashless payments is between 20 to 25 percent. Total household spending is increasing by about seven percent annually. E-commerce reached 1.6 billion euros in Serbia last year.

"This growth can still be intensified. We now have 10 billion euros in transactions, and there are bottlenecks that need to be addressed. Every other citizen uses cashless payments, but they say it's easier with cash, fearing theft, and the like," added Danon.

For more information about the conference, you can visit the Bloomberg Adriatic website.