Jamaicans cling to cash
Despite growth, e-transactions struggle to gain traction — BOJ report
DESPITE an increased push to get more people latched on to digital forms of payment, the use of cash across all spheres of the local population continues to outweigh these efforts, the findings from the latest Bank of Jamaica (BOJ)-commissioned National Financial Inclusion report has indicated.
According to the 2023 report prepared by Hope Caribbean following a survey of approximately 1,003 Jamaicans and some 420 small business merchants, cash continues to be the main method of payment being used by the majority of Jamaicans every day.
“It was almost three quarters or about [72 per cent] of respondents who reported using cash on a daily basis,” the 2023 report stated, citing lower income respondents or those from the almost 23 per cent unbanked population among those heavily using it.
“In scenarios where the use of cash for payment was an option, alongside digital methods, it invariably emerged as the method chosen by the majority of those engaging in the specific activity,” the report continued, noting specifically the behaviour of the working class and lower income respondents who it said used cash mainly to pay bills, make purchases in store and purchase phone credit. Conversely, the upper income respondents, it said, opted for digital payment methods such as debit and credit cards for their transactions.
As it relates to salary payments, the study also found that a larger percentage of the underbanked and banked populations continued to receive these in the form of cash, even as a greater portion of those banked (47.5 per cent) received their wages through direct deposits.
According to one online cash management platform Cashmaster, the top five reasons behind cash continuing to dominate as the preferred method for payment can be linked to its lack of need for payment and other transactional fees and interest rate charges often associated with digital payments. Other reasons include greater levels of frugality and less overspending when using cash as well as reduced safety, privacy, and accessibility concerns often required for digital payments.
The study, in further highlighting the predominance of cash, also found from the merchant aspect or supply side that cash was the form of payment universally accepted by all small and micro enterprises surveyed.
“In general, businesses accepted (100 per cent) while most often receiving about 93.9 per cent of its payments from customers in cash,” the study indicated as it noted point of sales (34 per cent) and other forms of payments, including electronic payment (32 per cent), among additional methods widely accepted.
The main reasons cited for merchants preferring cash transactions were those linked to the fact that it often allowed for “easier transactions” (25 per cent), “more convenience” (19 per cent), and was “more tangible” (17 per cent).
Additional findings from the study revealed that despite the consumers’ ability to use digital methods, this was often constrained by wholesale acceptance since most of those payment methods continued to be accepted by less than half of all the outlets surveyed. Similarly, a general lack of interest by most respondents saw them refusing to own any form of digital payment methods for reasons such as a lack of trust and heightened security concerns.
As a result, the respondents, when choosing digital methods, have underscored the security of transactions, affordability, ease, and convenience among some of the key areas of consideration for them.
The top digital channels that were utilised
included debit and credit cards, online banking apps, and mobile wallets.
With meagre acceptance for mainly mobile wallets, the use of those in comparison to the other forms of digital payments, the study said, continues to lag locally across all socio-economic groups. Greater awareness around branded and more popular types, such as Lynk, epay, and Sagicor’s Mycash, topped rankings based on the survey’s findings.
“While many were aware of these alternative payment methods, very few had actually used one. Lynk emerged as the method with the highest penetration, with 10 per cent of respondents having used it at least once. This was followed by the 4.1 per cent that used epay, 4.2 per cent NCB Quisk, and the 3.2 per cent that used Sagicor’s Mycash,” the report stated.