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Friday, July 25, 2025

21 per cent of T&T population unbanked

by

1391 days ago
20211003

T&T re­lies heav­i­ly on cash for trans­ac­tions, but the need for con­tact­less so­lu­tions due to the pan­dem­ic in con­junc­tion with the im­proved safe­ty, trans­paren­cy and ef­fi­cien­cy of cash­less modal­i­ties are paving the way for a less-cash so­ci­ety.

This ac­cord­ing to a re­cent­ly-re­leased re­port ti­tled, “The Way For­ward: Cash Trans­for­ma­tion and the Dig­i­tal Econ­o­my,” which was done by RBC Roy­al Bank in part­ner­ship with the Ox­ford Busi­ness Group which pro­vides

in-depth analy­sis of the in­no­va­tions un­der­way across the coun­try’s fi­nan­cial ser­vices sec­tor and fo­cus­es on key da­ta re­lat­ing to T&T’s so­cio-eco­nom­ic land­scape.

Ac­cord­ing to the re­port, the coun­try’s fis­cal, mon­e­tary and so­cial re­sponse to the pan­dem­ic was swift and com­pre­hen­sive, not­ing that $2.6 bil­lion of liq­uid­i­ty was re­leased in­to the com­mer­cial bank­ing sys­tem as a re­sult of these mea­sures.

It al­so not­ed that the bank­ing and ser­vice sec­tors re­spond­ed with com­pre­hen­sive mea­sures to adapt to the new nor­mal such as the re­duc­tion of in-branch trans­ac­tions and the pro­mo­tion of dig­i­tal plat­forms for all non-cash trans­ac­tions.

Fur­ther, the re­port al­so not­ed that to­geth­er, ATMs, call cen­tres, and on­line or mo­bile plat­forms were able to view ac­count bal­ances, trans­ac­tion his­to­ry, and per­son­al or busi­ness cred­it card ac­count in­for­ma­tion, send mon­ey to RBC and oth­er lo­cal banks, make bill pay­ments, send do­mes­tic and in­ter­na­tion­al wire trans­fers. Ac­cord­ing to the re­port, the tran­si­tion away from a cash-based econ­o­my is grad­ual, but the pan­dem­ic has helped to ac­cel­er­ate the process.

It not­ed that 21 per cent of the pop­u­la­tion was un­banked and re­lied on cash trans­ac­tions to pur­chase goods and ser­vices in 2020.

It al­so not­ed that the val­ue of card trans­ac­tions on­ly ac­count­ed for 14 per cent of GDP in 2018, adding that many small­er busi­ness­es do not have the tech­nol­o­gy to process card pay­ments.

How­ev­er, the re­port said that while T&T’s fin­tech ecosys­tem is still nascent, im­por­tant steps are be­ing tak­en to boost aware­ness among the pop­u­la­tion of the ben­e­fits of dig­i­tal­is­ing trans­ac­tions.

For in­stance, it said dig­i­tal trans­ac­tions us­ing chip and PIN, tap and two-fac­tor au­then­ti­ca­tion have helped re­duce the pop­u­la­tion’s cy­ber­se­cu­ri­ty con­cerns.

Ad­di­tion­al­ly, one key dri­ver go­ing for­wards is like­ly to be the adop­tion of dig­i­tal pay­ments by the pub­lic sec­tor as sev­er­al min­istries are in the process of do­ing so, in­clud­ing the Min­istry of Works and Trans­port and the Min­istry of Fi­nance.

Fur­ther, ad­di­tion­al pol­i­cy back­ing from in­ter­na­tion­al in­sti­tu­tions such as the De­vel­op­ment Bank of Latin Amer­i­ca are al­so help­ing to dri­ve the agen­da ahead. The re­port al­so ad­vised that a broad set of poli­cies from di­verse ac­tors are cru­cial to fur­ther boost dig­i­tal adop­tion in the econ­o­my.

It al­so urged that at­ten­tion must be paid to the eq­ui­table dis­tri­b­u­tion and ac­cess of dig­i­tal ser­vices, adding that con­tin­u­ous im­prove­ment of broad­band ac­cess and mo­bile phone pen­e­tra­tion will en­sure all cit­i­zens en­joy the ben­e­fits of a dig­i­tal econ­o­my.

More­over, it said in­cen­tives and sup­port for small and medi­um-sized en­ter­pris­es is cru­cial to en­sure this seg­ment can tran­si­tion along­side larg­er cor­po­ra­tions.

“Cus­tomers’ ex­pec­ta­tions have dras­ti­cal­ly changed with the ad­vent of new tech­nolo­gies and the glob­al na­ture of eco­nom­ic trade. Banks and fin­tech firms will con­tin­ue to see stiffer com­pe­ti­tion as cus­tomers de­mand re­al-time ser­vices and on­line plat­forms that are se­cure and easy-to-use,” the re­port said.

De­v­er­son Warn­er, di­rec­tor of cash trans­for­ma­tion, Caribbean Bank­ing, RBC said elec­tron­ic trans­ac­tions en­able faster, more con­ve­nient and eas­i­er rec­on­cil­i­a­tion when com­pared to cash trans­ac­tions, adding that there is greater trans­paren­cy in terms of track­ing and, as a re­sult, in­creased ac­count­abil­i­ty.

“Con­sumers and busi­ness­es al­so have greater se­cu­ri­ty since there is no han­dling, stor­ing or ex­chang­ing of bulky phys­i­cal ban­knotes, es­pe­cial­ly for larg­er trans­ac­tions,” he said.

Fur­ther­more, Warn­er ex­plained, if se­cu­ri­ty is breached, elec­tron­ic funds are eas­i­er to re­cov­er than cash, not­ing that busi­ness­es can now op­er­ate 24/7 with less ad­min­is­tra­tive costs due to dig­i­tal trans­ac­tions. Switch­ing from cash to cash­less pay­ments is al­so bet­ter for the en­vi­ron­ment.

Ac­cord­ing to Warn­er min­ing and trans­port­ing coins emits CO2, while the man­u­fac­ture of poly­mer and tra­di­tion­al ban­knotes re­lease CO2 in­to the at­mos­phere.

The move to a cash­less so­ci­ety, he added, helps busi­ness­es con­duct trans­ac­tions in a safer, less risky and more en­vi­ron­men­tal­ly friend­ly man­ner, re­sult­ing in high­er cus­tomer sat­is­fac­tion.

Warn­er al­so not­ed that since the on­set of the COVID-19, con­sumers have in­creas­ing­ly shown a pref­er­ence for con­ve­nient and con­tact­less pay­ment op­tions.

He ex­plained that sig­nif­i­cant growth in on­line pur­chas­es for es­sen­tial goods is dri­ving more cus­tomers to de­mand busi­ness­es across all sec­tors have an e-com­merce com­po­nent for con­tact­less trans­ac­tions.

“In­deed, the pan­dem­ic has ac­cel­er­at­ed the use of elec­tron­ic pay­ment so­lu­tions and reignit­ed the de­bate over a cash­less so­ci­ety, or at least a less-cash so­ci­ety.

“Along­side more and more con­sumers want­i­ng fast and con­ve­nient pay­ment so­lu­tions, gov­ern­ments and reg­u­la­tors are seek­ing to dri­ve fi­nan­cial in­clu­sion and re­duce cash us­age with the help of in­no­v­a­tive non-bank pay­ment and trans­ac­tion ser­vice providers such as Wi­Pay and Mas­ter­Card’s Bank in a Box,” he fur­ther ex­plained.

On the draw­backs of a cash-based so­ci­ety, Warn­er said cash car­ries a cost that af­fects in­di­vid­u­als, busi­ness­es and gov­ern­ments.

For in­stance, he said in­di­vid­u­als who do not use a pay­ment card or ser­vice may pay more for their cash trans­ac­tions with ex­tra fees and trav­el costs.

They are al­so more vul­ner­a­ble since hav­ing cash in hand makes them sus­cep­ti­ble to theft.

Warn­er said busi­ness­es han­dling and de­posit­ing cash at­tract two in­escapable costs— time and mon­ey. He ex­plained that hu­man re­sources are re­quired to pre­pare the cash reg­is­ter, rec­on­cile cash pay­ments and pre­pare the de­posit at the end of day.

Al­so, de­pend­ing on the size and type of busi­ness, se­cu­ri­ty may be re­quired. Ac­cord­ing to Warn­er theft and hu­man er­ror have been es­ti­mat­ed to be re­spon­si­ble for loss­es of four to five per cent of sales in some in­dus­tries.

In ad­di­tion, he said as more re­tail­ers re­alise the ben­e­fits of cus­tomer da­ta, they are see­ing first-hand that cash does not fa­cil­i­tate the cap­ture of con­sumer be­hav­iour da­ta. Ac­cord­ing to a study pub­lished in May 2016 by cred­it com­pa­ny Mas­ter­Card, ex­cess de­pen­dence on cash trans­ac­tions in the economies of both T&T and Ja­maica was slow­ing eco­nom­ic growth by stim­u­lat­ing in­for­mal­i­ty, in­creas­ing fraud­u­lent ac­tiv­i­ties and lim­it­ing fi­nan­cial in­clu­sion.

The study, ti­tled “Eval­u­at­ing the So­cial Cost of Cash” by Friedrich Schnei­der of the Jo­hannes Ke­pler.

Uni­ver­si­ty Linz in Aus­tria, ar­gued that the T&T econ­o­my could grow by an ad­di­tion­al 3.5 per cent if the coun­try in­creased its elec­tron­ic pay­ments by 30 per cent over a four-year pe­ri­od.

It added that while cash was once a pos­i­tive dri­ver of eco­nom­ic growth, it has now be­come a con­straint and gen­er­ates ad­di­tion­al costs.


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