The Effect of Card Payments on Financial Development among Provinces of Iran

Payment systems are the main components of the financial system of each country, which play effective roles in the rapid, efficient and safe transfer of funds among markets and various agents in the financial system, as well as in improving the efficiency of the financial system. These systems facilitate the carrying and using cash in the form of a payment card, and reduce the risks of theft or loss of cash. They reduce the risks of illness transmission compared to the exchange of notes, and allocate the income accrued to the deposit account as a bank profit. In addition, such systems lower the transaction costs and bank charges, and speed up the financial exchanges. Any electronic payment is possible from the platform of these systems. The identification of the effects of electronic payments on different economic and financial sectors is of great importance. This paper aims to investigate the impact of card payments, as a part of electronic payments, on the financial development among the Iranian provinces by using panel data approach. The estimations by Panel Least Squares method indicated that during the period of 2007-2016, the number of points of sales (POSs), the number of automatic teller machines (ATMs), and sum of number of POSs and ATMs as indicators of card payments had positive and significant effects on the ratio of facilities to deposits as an indicator of financial development.