The Effect Of Non -cash Payments On Economic Growth In Indonesia

The Effect of Non-Cash Payment on Economic Growth in Indonesia

In the current digital era, non-cash payment systems such as debit cards, credit cards, and e-money are increasingly changing the way people transact. This study aims to reveal the effect of non-cash payments on economic growth in Indonesia, with the amount of money supply (M2) as an intervening variable. Economic growth is measured through Gross Domestic Product (GDP) at a constant price.

Understanding the Role of Non-Cash Payments in Economic Growth

Non-cash payments have become crucial instruments in facilitating transactions and increasing economic efficiency. The analysis method used is path analysis (path analysis), which is the development of multiple regression analysis, aiming to evaluate how much influence the independent variable on the dependent variable indirectly. In this context, non-cash payments play a vital role in supporting economic growth by increasing the amount of money supply and facilitating transactions.

Research Result

The results of the study show that:

1. Debit Card: has a significant positive influence on the amount of money supply and economic growth. This shows that the increasing use of debit cards encourages economic growth through increased liquidity in society. Debit cards provide individuals with a convenient and secure way to make transactions, which in turn increases the amount of money supply in the economy.

2. Credit Card: has an insignificant negative influence on economic growth. This may be caused by a higher risk of debt that can hamper consumption, even though credit cards increase the money supply. Credit cards can lead to overspending and debt, which can negatively impact economic growth.

3. E-Money: has an insignificant positive influence on economic growth. Although its use increases, the impact on GDP is still not significantly felt. E-money provides individuals with a convenient and secure way to make transactions, but its impact on economic growth is still limited.

Path Analysis Result

From the path analysis, it can be concluded that the debit card has a positive direct effect on economic growth with the amount of money supply as an intervening variable. Meanwhile, credit cards and e-money have an indirect positive influence on economic growth, also with the amount of money supply as an intervening variable. This suggests that debit cards have a direct and significant impact on economic growth, while credit cards and e-money have an indirect and insignificant impact.

Additional Analysis

The growth of non-cash payments in Indonesia is also affected by several factors, such as government policy and technological advances. The fast adoption of information technology and support from financial institutions has encouraged the public to switch from the method of cash to non-cash. The success of government programs in providing digital infrastructure, such as better internet networks and security systems for non-cash transactions, will further strengthen the position of non-cash payment in the economic system.

However, challenges such as lack of understanding and public confidence in the new payment method also need to be overcome. Effective education and promotion about the benefits and safety of non-cash payments can increase the adoption and use of the system in the community. This suggests that government and financial institutions need to play a crucial role in promoting and educating the public about the benefits of non-cash payments.

Conclusion

Thus, it can be concluded that non-cash payments, especially through debit cards, play an important role in supporting Indonesia's economic growth. Increasing the amount of money supply through non-cash transactions has a significant impact on the country's economy, and needs to be supported by the right policies from the government and public awareness of the importance of an efficient payment system. The government and financial institutions need to promote and educate the public about the benefits of non-cash payments to increase its adoption and use.

Recommendation

Based on the study, the following recommendations can be made:

1. Promote Debit Cards: The government and financial institutions should promote the use of debit cards as a convenient and secure way to make transactions.
2. Improve Digital Infrastructure: The government should improve digital infrastructure, such as better internet networks and security systems for non-cash transactions.
3. Educate the Public: The government and financial institutions should educate the public about the benefits and safety of non-cash payments.
4. Regulate Credit Cards: The government should regulate credit cards to prevent overspending and debt.

By implementing these recommendations, the government and financial institutions can increase the adoption and use of non-cash payments, which in turn can support Indonesia's economic growth.
Frequently Asked Questions (FAQs) about the Effect of Non-Cash Payment on Economic Growth in Indonesia

In our previous article, we discussed the effect of non-cash payments on economic growth in Indonesia. Here are some frequently asked questions (FAQs) about the topic:

Q: What is non-cash payment?

A: Non-cash payment refers to the use of electronic or digital means to make transactions, such as debit cards, credit cards, e-money, and online banking.

Q: How does non-cash payment affect economic growth?

A: Non-cash payment can increase economic growth by increasing the amount of money supply, facilitating transactions, and reducing the risk of cash-based transactions.

Q: What is the role of debit cards in non-cash payment?

A: Debit cards play a significant role in non-cash payment as they provide individuals with a convenient and secure way to make transactions, which in turn increases the amount of money supply in the economy.

Q: What is the impact of credit cards on economic growth?

A: Credit cards can have a negative impact on economic growth as they can lead to overspending and debt, which can hamper consumption.

Q: What is the impact of e-money on economic growth?

A: E-money has an insignificant positive influence on economic growth as its use increases, but the impact on GDP is still not significantly felt.

Q: What are the factors that affect the growth of non-cash payments in Indonesia?

A: The growth of non-cash payments in Indonesia is affected by several factors, such as government policy, technological advances, and public awareness.

Q: What is the role of government policy in promoting non-cash payment?

A: Government policy plays a crucial role in promoting non-cash payment by providing digital infrastructure, such as better internet networks and security systems for non-cash transactions.

Q: What is the importance of public awareness in promoting non-cash payment?

A: Public awareness is essential in promoting non-cash payment as it can increase the adoption and use of the system in the community.

Q: What are the challenges faced by non-cash payment in Indonesia?

A: The challenges faced by non-cash payment in Indonesia include lack of understanding and public confidence in the new payment method.

Q: How can the government and financial institutions promote non-cash payment?

A: The government and financial institutions can promote non-cash payment by educating the public about the benefits and safety of non-cash payments, improving digital infrastructure, and regulating credit cards.

Q: What are the benefits of non-cash payment for the economy?

A: The benefits of non-cash payment for the economy include increased economic growth, reduced risk of cash-based transactions, and improved efficiency in transactions.

Q: What are the recommendations for promoting non-cash payment in Indonesia?

A: The recommendations for promoting non-cash payment in Indonesia include promoting debit cards, improving digital infrastructure, educating the public, and regulating credit cards.

By understanding the FAQs about non-cash payment, individuals and businesses can make informed decisions about using non-cash payment systems and contribute to the growth of the economy.