Data has the power to unlock and create enormous value for governments, businesses, and citizens, enabling them to address some of their most pressing challenges. It is also a powerful engine of economic activity and technological innovation. As the level of digitalization increases and the volume of data in society and the economy grows, extracting and capitalizing on insights from data will be critical to maintaining national competitiveness and driving economic prosperity.

Payments data offers a unique snapshot of macroeconomic and microeconomic behaviors and trends. Due to its granularity, payments data also allows for different levels of aggregation, which enable a nuanced understanding of spend patterns.

Payments data presents three important areas of opportunity for governments today:

	As the tourism sector recovers from the impact of the COVID-19 pandemic, payments data can help public tourism bodies steer toward better informed campaigns supported by more effective budget allocation. Understanding consumer behavior and spending patterns enables tourism entities to offer tailored services—helping them stand out in an increasingly competitive international environment.

	In urban planning, payments data can help public authorities understand the economic impact of climate change, model future scenarios, and make better strategic decisions. Payments data is invaluable for city managers, allowing them to better plan initiatives related to sustainable street design or public mobility and to gain unique and valuable insights into the financial impact of different options.

	And in the area of macroeconomic foresight, the accelerated adoption of digital payments throughout the COVID crisis has positioned payments data as one of the strongest indicators of economic recovery and growth in the post-pandemic world. “Nowcasting” based on payments data is faster than official statistics and also enriches them, in many cases improving the outputs.

Data privacy and security are arguably the most important issues facing governments as they work with data. Responsible data use and data sharing principles and frameworks should ensure the protection of citizen rights, and simultaneously promote innovation and the intrinsic value generated for the public sector, private companies, and citizens. However, there is often a patchwork of regulations across sectors and regions: more coordinated, harmonized, and interoperable frameworks will be critical to ensuring the responsible and ethical global use of data.

Looking ahead, governments that include payments data in their data warehouses can capture powerful insights, benefit from more informed policy development, and gain the ability to measure and monitor policy outcomes and impact. Partnerships with the private sector can enhance governments’ data science expertise and accelerate data-based innovation. Through such collaboration, governments can position themselves as leaders in their countries by setting the standards around data governance and ethical standards, while also realizing rich market and economic insights.

This study has been commissioned and developed in collaboration between Kearney and Visa, a global payments organization.