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Free-flowing data is good for people and the global economy

The free movement of data is essential to the global economy.

With the click of a button, someone in Singapore can instantly purchase a product from a merchant in London. A startup in the Atlanta suburbs can sell to people on the other side of the world. A European business traveller can tap a card at a coffee shop in São Paulo and the transaction is approved in seconds.

These digitally-enabled transactions are great for individuals and for economic growth — but they can also bring challenges.

Governments around the world are increasingly weighing how best to manage their country’s digital transformation while safeguarding individual privacy and cybersecurity. As a result, some policymakers are looking to localisation measures in an attempt to keep data secure. However, these policies risk reducing trade, slowing productivity and dampening innovation.

A 2020 study by the European Centre for International Political Economy estimated that a regulatory ban on data transfer from the EU to the US could reduce digital imports by 31%, contracting the EU’s GDP by as much as 3%.

Highlights of Visa’s Data Privacy Survey Insights, 2020-22 Image: Visa

Individuals want more visibility and control over how their personal data is used and stored.

One of the big challenges to cross border data flows is the lack of a global standard for individual data protection. Today, the way companies gather and manage individual data and their consent varies by region and platform. The ecosystem lacks a consistent and transparent way of gathering these permissions, and individuals are frustrated. Between 2020 and 2022, Visa surveyed more than 18,000 individuals on their banking behaviors and attitudes, online activity, data privacy and data sharing preferences around the world.

The conclusions are clear. Individuals are: 1) concerned about their digital privacy, 2) do not fully understand how their information is used when conducting digital activities and 3) desire stronger consent and control mechanisms to help manage their ever-expanding digital footprints.

The survey results showed that 76% of individuals want at least the option to have more control over their data.

The survey results also show that current individual experiences with personal data management can be inconsistent, unclear and often frustrating. As it stands, 35% of individuals globally are less inclined to engage digitally due to the lack of sufficient permissions controls, including by being less likely to conduct digital activity such as online shopping.

These findings illustrate the urgent need to create a robust and inclusive digital ecosystem that empowers individuals. To do this, businesses must earn the individual’s trust.

Earning trust begins with giving them the ability to make real choices when it comes to their data by:

  • Offering simple, clear and consistent information;
  • Providing transparency around what data is being collected and with whom it is shared;
  • Introducing time limits on data use and the ability for individuals to revoke permissions at any time;
  • Providing the ability to control data use through distinct choices for different use cases;
  • Developing easy-to-access tools for updating permissions choices.

Governments have an important role to play

Governments also play an important role in fostering an empowering digital ecosystem. Innovative public policies can achieve high levels of individual data protection without trade-restricting protectionism. The United States and Singapore acknowledged this reality in 2020 when they jointly declared that “the ability to aggregate, store, process, and transmit data across borders is critical to financial sector development” and that the “expanding use of data in financial services and the increasing use of technology to supply financial services offer a range of benefits, including greater individual choice, enhanced risk management capabilities, and increased efficiency.”

Governments can further support digital and economic growth by ensuring that policies do not discriminate between domestic and foreign suppliers. In addition, they can work with other countries and international organizations to develop and promote global standards for individual data protection. Businesses are best able to interact with individuals, innovate and compete when the rules of the game are clear and when domestic and international players are treated fairly and equally.

Moreover, governments and businesses should invest in education and awareness campaigns that help individuals understand their rights and how to protect their personal information. This is ultimately good for individuals because it helps enhance innovation and improve market efficiency.

Collaboration across all sectors is key

Academia and civil society also play a crucial role. They can promote accountability and transparency, while bringing awareness on how different policies and practices can affect individuals and communities. Open market policies and individual protection are not mutually exclusive. Indeed, they can be mutually enhancing.
Businesses can do their part by earning individual trust and putting forward data management tools that empower individuals. Governments can do their part by creating an environment that allows businesses to grow — not by creating barriers. Academia and civil society can help monitor and report on the practices of government and companies.

The time is now for academia, civil society, companies and governments to work together on these issues. Coordinated cooperation today will lead us to a more inclusive, robust and resilient global digital economy tomorrow.

Find out more about specific ways that collaboration among all sectors can advance the trusted flow of data across borders in the Forum’s recent paper.
Source: World Economic Forum

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