Electronic payment system closer with World Bank loan

Guyana will soon begin rolling out its electronic payment system, scrapping its old paper method, as it yesterday formally clinched a US$6M loan from the World Bank.

‘Consumers benefit from more efficient financial intermediation by enhancing the quality and improving the cost-efficiency of all types of payments; wider availability and usage of payments instruments for consumers such as e-money and debit cards. Development of these instruments have great potential to reach the financially excluded,” a statement from the Ministry of Finance said.

An agreement was signed yesterday between Guyana and the World Bank, at the Ministry of Finance Head Office, for the Guyana National Payment System (NPS) Project.

Minister of Finance Winston Jordan believes that the development of the NPS will support Guyana’s economic growth and diversification. Not only that, but that improvements in this country’s NPS would raise economic efficiency, through fiscal gains, for the Government by reducing usage of paper-based payment instruments and increasing electronic payments.

“The objective of the project is to improve Guyana’s national payments system (NPS) by enhancing safety and efficiency of payments. The Government of Guyana could save up to $266 million (0.04 % of GDP) annually by switching from paper-based payment mechanisms to electronic payments. The Banking System will have the capability of settling transactions across banks in real time, benefitting a wide range of consumers, including individuals and small businesses, Commercial Banks, Money Transfer Agencies and the Business Community,” the statement informed.

“Development of the NPS supports economic growth through a financial sector that is stable and enables efficient financial intermediation. Payment and securities settlement systems have a strong bearing on financial stability. A sound payment system can mitigate financial crises by reducing operational, credit, legal, liquidity, investment, general business, and custody risks in a system. Improvements in payments infrastructure is critical for efficient provision of financial services… A well-functioning domestic financial sector is essential for diversification. Guyana is a resource rich economy; mainly dominated by large extractive sectors that are funded from abroad. This includes forecasted large revenues from the oil industry. The national payment system is one of the principal components of a country’s financial system and, therefore, crucial to a country’s economic development,” it added.

Government had signaled its intention last year, of moving away from paper to the more modern use of electronic payments.

The announcement had followed a cost study done by the World Bank that said indications show that once the programme was successfully implemented the benefits would be significant in myriad ways and in several areas.