ASEAN-5 in the Digital Era: Impact of Digital Cashless Payments on Economic Growth

This chapter examines the effect of digital cashless payment on economic growth among five Association of Southeast Asian (ASEAN-5) countries, namely Indonesia, Malaysia, the Philippines, Singapore and Thailand. Digital cashless payments have grown increasingly noticeable with their penetration increasing across the ASEAN-5 countries. While past studies focused on the European or countries with financial grouping memberships, this chapter focuses on the ASEAN-5 countries within the same geographical grouping. Some of these countries were seldom investigated in this related field previously. This chapter utilises a panel data model to analyse the relationship between digital payments and economic growth in ASEAN-5 countries. The dependent variable is GDP growth represents economic growth while the independent variables are credit card transaction volume growth rate, e-money transaction volume growth rate, inflation rate, population growth rate and internet penetration rate in the ASEAN-5 countries. The analysis is supported by findings from the literature and secondary data. The results of this chapter show that all three digital payment methods are positively correlated with economic growth. All credit card transaction volume and e-money transaction volume are positively correlated with economic growth, suggesting that fostering an environment conducive to cashless payments can be a strategic approach for ASEAN-5 countries to accelerate their economic growth. To leverage the benefits of digital cashless payments, ASEAN-5 countries should expand investments in digital infrastructure, enhance financial literacy programmes, promote public awareness and pursue greater regional collaboration for a seamless digital payment ecosystem.