Georgia lawmakers seeking to grow the state’s financial technology industry are considering two models that have produced encouraging results: film and manufacturing.
The film industry’s economic impact in Georgia has soared from negligible in 2007, the year before the General Assembly approved generous tax credits to lure film and TV productions here, to $7 billion in fiscal 2016. Passage of legislation in 2013 eliminating the state sales tax on energy used in manufacturing has helped expand factories and retain manufacturing jobs.
The same incentives-based approach is needed now if Georgia is to hold onto a rapidly growing fintech industry that accounts for 30,000 to 40,000 mostly high-paying jobs, H. West Richards, executive director of the American Transaction Processors Coalition, told a legislative study committee at its first meeting Aug. 11.
“This industry is very mobile,” he said. “These jobs can leave.”
Georgia already is a fintech hotbed, third behind California and New York with about 100 companies active here, including six of the 10 largest. Industry leaders with a presence in the state include First Data Corp., Global Payments Inc., NCR Corp., WorldPay US, and Columbus-based TSYS.
More than $40 billion in credit and debit card transactions are processed in Georgia, 60 percent of the world’s total.
Connectivity and mobility are two key advantages to doing business in Atlanta that have helped Georgia attract fintech companies, said Scott Meyerhoff, chief operating officer and chief financial officer for InComm, a major prepaid card provider.
“All the fiber that runs up and down the East Coast runs through Atlanta,” he said. “We can go anywhere around the world in one to two seconds. ... “It’s [also] very easy for us to go down to Hartsfield-Jackson[-Atlanta International Airport] and go anywhere we want to go.”
The study committee, which includes members of the Georgia House of Representatives and state Senate, is expected to consider incentives that could help local fintechs expand and recruit firms to the state. The panel is due to make recommendations by Dec. 1.
Richards called for a tax credit initiative similar to the 30 percent credit geared toward the state’s film and television industry.
“With the right public/private leadership turbo-charged with the right combination of incentives, Atlanta and Georgia have a real shot at emerging on the world stage as one of the great financial technology capitals of the 21st century,” he said.
Richards said other incentives could encourage workforce development, such as university courses and on-the-job training. Such incentives also could include tuition reimbursement, reduced student loan obligations, or shared training costs, he said.
“Georgia’s payments industry hub, which represents the lion’s share of our fintech industry, will be lost if we are unable to innovate fast enough to meet the demands of a digital economy,” Richards said. “Innovation on that scale is no easy task, especially when jobs are going unfilled because people do not know about the industry or are lured away to Silicon Valley, New York City, or growing tech clusters in Austin, [Texas] and Denver.”
Incentives also could help attract corporate innovation centers to Georgia and grow the existing ones. The state’s research institutions, such as Georgia Tech, and its entrepreneurial culture make it a magnet for R&D centers.
Georgia Rep. Ron Stephens, R-Savannah, said he’s considering a different approach that would extend to the fintech industry the exemption from state sales taxes Georgia manufacturers enjoy. Stephens, co-chairman of the study committee, said data centers use a tremendous amount of electricity, power that many competing states don’t tax.
“I want to put them on a level playing field with other states,” he said.
Roy Bowen, president of the Georgia Association of Manufacturers, said eliminating the sales tax on energy has paid dividends for manufacturing companies.
“Look at the flooring companies that have in expanded in northwest Georgia,” he said. “They will certainly point to the sales tax [exemption] on energy used in manufacturing as a factor.”