BRIDGETOWN, Barbados – The senior financial sector specialist at the World Bank, Nicholas Smith, Tuesday said Caribbean countries are lacking in the implementation of fast payment mechanisms that have proven to be a major breakthrough in business transactions globally.
Senior Financial Sector Specialist at the World Bank, Nicholas Smith“Fast payments as they are also known are every where now…roughly in 120 countries, but in the Caribbean we are not there yet,” Smith said at the launch of the Central Bank of Barbados (CBB) national instant payment system , named “BimPay”.
He said there are a couple jurisdictions that have some form of the payment system “ and why this matters is just not to keep up with the Jones…because not having the system makes life more difficult.
“Think about everybody’s life, your grandma, the taxis, sending money to your family . It’s a bit inconvenience and so it is great to see that the Caribbean is starting to take the thing in and actually Barbados is at the forefront of these reforms.
‘We are encouraged to see that because there are so many benefits that we are seeing. Look at what’s happening in Brazil , Paraguay is doing a lot, El Salvador has done a lot, Costa Rica has done a lot and it is really making everyone’s life better”.
Smith said that in Brazil, nine out of 10 businesses use the instant payments and “we are talking the fruit vendor to the car repair man.
“And so this is something for everyone. This is not just for the slight few and for us what we have seen where these kinds of reform are successful, one we see just as is taking place here, the central banks are increasingly leading the way, providing the public good and then letting the financial institutions plug in and use it.
“It is not like the central bank in one way is providing a public service but then giving this platform so that so much market development can be driven by the financial institutions tailored to the needs of their consumers”.
He said another positive effect of the system as identified in the countries where it is in operation is the public and private engagement dialogue including the consultative process bringing together the key stakeholders and “so everybody is part of this process of driving the digitalising payments in the economy”.
He said the implementation of the system is also promoting competition “in all the cases where it is really taking off because you’ve got now all financial institutions that can offer the same services as the big banks with this market development”.
Barbados Central Bank Governor, Dr. Kevin Greenidge
The CBB said that the launch provided it to introduce the system’s name and logo, and outline plans for a comprehensive public education programme to prepare Barbadians for its introduction.
It said that the IPS will allow individuals, businesses, and government to send and receive payments within 10 seconds, with the recipient being able to access the funds immediately upon receipt.
The CBB said that the system will also be fully interoperable, removing barriers that previously limited such transactions to between individuals who banked with the same financial institution.
Central Bank Governor, Dr. Kevin Greenidge, told the ceremony that the new payment system will give consumers a choice.
“First from the financial institutions perspective…the cost of doing it on your own is expensive as a financial institution. There are a lot …just to out a payment system in place as a financial institution.
“But the central bank taking on that role providing the infrastructure and putting that in place, it allows and financial institution, any fintech and innovative person to setup a financial services…,” Greenidge said.
He noted that a credit unions for example, could get together and establish their own payment system and by reducing the cost of the technology the financial institution would have to put in place and thereby pass on those savings to their customers.
“What we have also seen…it is choice. The idea that we are looking to eliminate cash is not correct. We are giving you a choice. You may decide to walk with 500 dollars to the supermarket or you may take your app and pay for your goods…that’s your choice.
“But what we have seen in countries who have done this, is that overtime the amount of cash persons use fall automatically because you don’t have to worry about putting money in your pocket and once you have your mobile devise you are safe”.
Greenidge said that the financial institutions are involved in “counting cash and someway you will have to pay for it and so by reducing that amount you could see you can see the savings passed on to the customers.
“Just the digital revolution that this will bring, will in itself reduce costs across the board and so we expect to see those savings passed on and it allows more players to enter …and more players will mea competition and you will have to be more creative in the products they offer”.
Greenidge said that the CBB has taken the necessary measures to ensure the safety of the BimPay that will transform how payments are made in Barbados through its speed, inclusivity, and 24/7 availability.
