KINGSTON, Jamaica – The Bank of Jamaica (BoJ) says a third digital payment wallet provider is expected to enter the market in the near future to facilitate transactions utilizing Jamaica’s Central Bank Digital Currency (CBDC).
It said the prospective wallet provider is on the verge of entering the BoJ’s regulatory sandbox, which is a mechanism to facilitate financial technology innovations testing.
Digital wallet electronic platforms offer payment solutions that facilitate transactions involving CBDC, a digital form of central bank-issued currency. CBDC is legal tender that can be exchanged dollar for dollar with physical cash.
Jamaica’s CBDC is called JAM-DEX, which stands for Jamaica Digital Exchange.
“I’m happy to say that although we only have one institution that is currently offering JAM-DEX, and I must big up that institution, they have been doing so for more than a year now, and that is National Commercial Bank (NCB),” said BOJ Governor, Richard Byles.
“There is another that is complete and ready to roll. They are just doing their testing internally and I expect that, shortly, they will come on board. There is another that is behind that is about to enter the sandbox,” he added.
Lynk was the first wallet provider approved by the BOJ for CBDC transactions and earlier this year, the BOJ announced Jamaica National as the second wallet provider.
Byles described the facility’s development as an investment in the sector, noting that it “costs quite a bit of money” for commercial banks to develop their wallets.
“One of the largest expenses that a bank has, especially the large retail banks, is the management of cash. One of the biggest headaches that they have is the movement of cash, and one of the prospects of the digital currency is that it will reduce this cost and reduce this headache.
“One of the biggest expenses for most retail enterprise businesses is the handling of cash, the storage of it, the transportation of it. So even the business enterprises will benefit from the existence and usage of digital currency. So, there are long-term benefits to be reaped from this initial investment.
“This is what I keep saying to the banks. I want to encourage them. This is an investment, not for tomorrow’s P&L (profit and loss). It is an investment to deliver better service in the near term as well as to improve your P&L in the medium term,” Byles added.
He said that smaller enterprises have been taking advantage of the digital currency as they serve their customers.
“Smaller merchants who don’t have Point of Sale (POS) machines and would have a cellphone, we are beginning and have had significant success in pushing out the program to have them recruited to take JAM-DEX, and we have a significant number of them who are now in a position to do so.
“We also have over 200,000 individuals who have the capacity on their phones to pay for services and goods with JAMDEX,” Byles said, adding that the government is committed to supporting the Central Bank in its efforts to roll out JAM-DEX.
“In two consecutive budget presentations, the Minister of Finance [and the Public Service] has set aside funds to help us to recruit small merchants to JAM-DEX and to get the program going. We are now speaking to other agencies of Government that handle taxes and make payments – whether It’s PATH payments or pension payments. So, we have a large player in the form of the Government that is proactively assisting us, as well as our own efforts to go out there and get these POS machines reconfigured, so that they can accept JAM-DEX QR codes.”
The Governor said once these machines are recalibrated, a mass campaign will be undertaken to encourage more persons to use the facility.
“It means that every supermarket, every fast-food enterprise, pharmacies, all of the kind of merchants that you and I go to several times and spend quite a bit of money with, they will be able to take JAM-DEX. At that point, we will start a big mass campaign to get individuals to take JAM-DEX on their phones and to begin to use it as currency,” he said.
