Globally, the payment processing industry has begun a push to convince people and countries that electronic payment is superior to cash in hand.
Now in Jamaica, we spoke to MasterCard country manager, Dalton Fowles, to understand how his company plans to execute the “war on cash” locally, especially given certain cultural biases that exist.
For that, Fowles has a few strategic moves that can help the local regulators and government officials get through the mental blocks.
“We have seen in other countries where persons who use electronic payments are automatically entered to win prizes. So, for example, in Jamaica your gardener, whom you pay in cash, may be encouraged to take mobile payments because doing so enters him into a lottery to win prizes. That could either be a government-sponsored lottery or merchants can come together to offer prizes for participation. Another option we have seen in other countries is that (automated teller machines) ATM withdrawals over a certain amount of money attract a tax. So this would [deincentivise] persons from using cash. So there are ways we can create a new culture in terms of the use of electronic payments.”
“However, for economic expansion, there is a significant opportunity to become part of the digital economy. We understand that the culture change won’t happen over night.”– MasterCard Jamaica country manager, Dalton Fowles
Another option that Fowles suggested is that Government gives tax incentives to small business owners who use electronic payments. However, he acknowledged the challenge in that proposal given high tax compliance issues. “I understand and don’t want to sound like (a) hypocrite. However, if you are a small man on the ground and don’t believe in paying taxes and only believe in cash as a way to be better off, you are missing some key elements. For example, if you want to go to the bank to get a loan, chances are you can’t because you can’t prove your income.”
Now, the micro-finance industry has stepped in to address this financing gap. However, Fowles reminds us that this comes at a cost. “The micro-finance (industry) has stepped up at what price point? If you want to borrow at seven percent per month, but with fees, that is significant. If you want to expand your business and you want to grow, the best way to do that is with electronic payments. Why? Because, you can go to your banker, (and say) ‘see here, I have two years worth of data to show that I am running a legitimate company’. And as such you are able to afford reasonably priced credit.”
Fowles continues, “If you want to buy a little car, or a bike, or qualify for National Housing Trust, you cannot access it. And in the real economy doesn’t mean that it cannot translate to the small man. Some of the greatest innovation in the world comes from the small man. Imagine, you sell orange and you are on Instagram. And your neighbour can buy online and then order and pick up and pay for the oranges to your phone.”
The change of culture is something that Fowles acknowledges will not happen quickly. “In the Nordic countries you have electronic payment acceptance at 80 per cent and in the United States and Canada it is at 50 per cent. Jamaica is at 20 per cent and so we know that the turn from cash payments will not happen overnight.”
And creating a new culture is important as there is heavy resistance to digitisation of cash.
In a 2019 reported published by Kamesha Blake for the Planning Insitute of Jamaica (PIOJ), it was noted that, “Since 2013, five products have been launched with extensive offerings comparable to more advanced markets — four products are currently operating Alliance Investment ePay – MasterCard, GK Mpay, NCB Quisk, and Sagicor My Cash (in partnership with Digicel).
The Jamaica Co-operative Credit Union League’s (JCCUL) product, CONEC withdrew from the market in November 2017. CONEC expected early adoption of 50,000 users by the end of 2014, and exponential growth, however, they only had 6,000 accounts by the end 2015, and only 20,000 accounts by the time they withdrew from the market with purchasing air-time (phone credit) accounted for 80 per cent of all transactions.”
“As we work with our partners in the government, the regulatory agencies and the private sector, we believe we can demonstrate that digital payments will open up the economy in beneficial ways.”MasterCard Jamaica country manager, Dalton Fowles
Further, the Inter-American Development Bank writes in its “Why is Financial Inclusion So Important” blog post that the following are reasons for Jamaicans resisting the digitisation of money.
For the MasterCard value proposition, Fowles explains, “However, for economic expansion, there is a significant opportunity to become part of the digital economy. We understand that the culture change won’t happen overnight. However, as we work with our partners in the government, the regulatory agencies and the private sector, we believe we can demonstrate that digital payments will open up the economy in beneficial ways.”