The Bank of Jamaica (BOJ) has given its approval for Lasco Financial Services to test its electronic commerce payment system, dubbed LASCO Biz, within its Fintech Regulatory Sandbox.

The sandbox, which was activated earlier this year, is a controlled environment for the deployment and testing of financial technology. Through LASCO Biz, Lasco Financial Services will give access to an e-commerce platform, allowing merchants to accept card payments electronically on a website or through the use of payment buttons.

The platform will benefit businesses, as it will provide them with simplified inventory management and financial statements. Upon full approval, Lasco Financial Services will make the service available to the general public.

Lasco Financial Services Managing Director Jacinth Hall-Tracey, who made the disclosure, says this innovation is part of the microfinance company’s strategy of financial inclusion to assist small medium and micro entrepreneurs to embrace new business opportunities. These opportunities, she said manifest themselves from the new methods of conducting business. 

BOJ SANDBOX

The objectives of the sandbox are to provide a platform to encourage innovations in financial services, promote competition and financial inclusion. Participants in the sandbox will be permitted to test innovative financial products, services and businesses in a controlled environment.

The sandbox, which is equipped with appropriate safeguards to manage risks, including financial stability risks, serves to promote BOJ’s understanding of fintech products, services and business models. It will also inform the framing of new regulations or the amendment of existing regulations.

Eligible participants in the sandbox are BOJ-regulated entities such as deposit-taking institutions (DTI’s), cambios, remittance service providers and fintech companies in partnership with DTIs. This is to ensure that BOJ has oversight over the regulated entity offering the payment services.

The sandbox is open to licensed securities dealers that have been granted permission by the Financial Services Commission to participate. The sandbox replaces BOJ’s Electronic Retail Payment Services guidelines, which were withdrawn on March this year due to limitations of the underlying legislative and regulatory framework for payment service providers. 

POOR Q2 RESULTS DUE TO FALL-OFF IN LOAN SUBSIDIARY EARNINGS

Lasco Financial recorded a revenue fall-off of $37.8 million in its second quarter, which ended on September 30, 2020, to earn $617.7 million. The just-released quarterly results show that the 5.7 per cent revenue decline is largely due to the fall in earnings from its subsidiary loan company, which was mainly due to COVID 19.

Revenues for the period under review amounted to $152.2 million, down 34.5 when compared with the previous quarter in 2019. However, there was a compensating increase of $50.4-million or 11 per cent jump in revenues from remittance transactions and a $33.5- million or 10.8 per cent increase in cambio revenues.

In its quarterly report Lasco Financial Services told shareholders that “the loan business continues to experience the residual impact from the effects of the COVID pandemic, whereas the money service business showed strong quarterly growth. At the onset of the COVID-19 pandemic several initiatives were put in place to control non-essential expenditure, as such there was a 32% reduction in expenses in the quarter, primarily caused by the reduction in selling and promotion expenses”. 

TURNAROUND FROM LOSSES IN FIRST QUARTER

The loss of $16.4 million in the first quarter April –June this year has been erased in the second quarter July-September, closing the period with a profit $136 million. The company saw its consolidated profit after tax for the six months ending September 2020 amounting to $30.1 million, down from the corresponding period’s $74.7 million.

However, this was an improvement on the first quarter which showed a loss of $105.7 million.