Credit card usage increases registered employment, both overall and among women. Banks modernize Turkey’s economy.

Turkey is at the bottom among European countries in terms of female labor force participation, but it is at the top in terms of POS device usage. It ranks third in Europe in terms of the number of credit card and bank cards in use with two credit cards per person on average. The prevalence of POS devices is promising for women’s employment. Studies reveal that registered employment, overall and among women, increases in Turkey as credit card usage increases. I want to note this down to validate once again that without banks, modernization would be a daydream for Turkey. So, here is the deal:

When I was born, there were no POS devices or credit cards. Back in the first half of the 1960s, Turkey was a sleepy, agricultural county. It was Turgut Özal who awakened Turkey and showed us that there was a world out there. But I did not own a credit card in the early 1990s. Turkey was concerned rather with how to manage the public domestic debt stock. The inflation rate floated around 80 percent. Then, with Bülent Ecevit’s decision, Kemal Derviş came to lead economic management. Inflation decreased from 80 to 8 percent. Banks had to start banking. I obtained a credit card. Erdoğan’s governments adhered strictly to Kemal Derviş’s programs and public debt stock ceased to be a challenge for Turkey. Meanwhile, consumer loans and credit card usage boomed. Today every store in Turkey has a POS device. In the last decade, Turkey made an economic leap thanks to its banks. Their modernization has enabled Turkey’s modernization.

After this plot summary, let me get to the point. You must have seen a POS device; they are there every time you shop in a retail store. POS is the abbreviation of “point of sale,” that is, checkout. At the checkout, you tell the cashier which method of payment you would like to use. If you did not choose to pay cash, the cashier swipes your card through this tiny device to learn if you have the credit line or credibility for the payment. Shortly the transaction is completed. In the bigger picture, each and every transaction is put on the record regardless of the size of the business. A third party, namely banks, gets informed of the transaction. So does the Ministry of Finance. In Turkey, there are 3046 POS devices per 100,000 people, according to the 2012 statistics by the World Bank. Figures for France, England and the USA are 2,153; 2,176; and 2,156, respectively. Malaysia, which competes with Turkey for 17^th place in world economic ranking, has a long way to go in modernization. They have 941 POS devices per 100,000. Turkey is the best of Europe in terms of POS device usage. Why? Probably because we have more small-sized enterprises and we are new to the system.

POS devices connect all businesses in a country with each other. It modernizes the economy through customers. Customers put businesses on record. First, sales points are recorded. The transactions of local convenience stores, which lately have started to grow to the size of markets, as well as all those other retail stores, are recorded. Second, the transactions of the wholesale suppliers that sell to the retailers are recorded because the retail stores have to keep records of their purchases as well as their sale to give account to the Ministry of Finance. Through the same mechanism, the first-circle suppliers have to keep records of their suppliers and employees. This takes on a domino effect. In this process as a whole, the growth of the financial services sector improves women’s employment, as also suggested by a study by Güneş Aşık of TEPAV. Why? To begin with, the distribution network has modernized thanks to POS devices that directly facilitate women’s employment in the services sector. Women’s employment is high in shopping malls, for instance. Second, with businesses switching to the registered sector since their transactions are recorded, women employed in these businesses also have switched to registered employment. Please note that women’s employment is concentrated in the retail, textile, and food sectors. Credit card usage increases registered employment, both overall and among women. Banks modernize Turkey’s economy. Credit cards belong to the present era.

This commentary was published in Radikal daily on 30.07.2013