JAMAICA’S central bank digital currency (CBDC) Jam-Dex is expected to become available to the public by the end of this month, but the Bank of Jamaica (BOJ) is signalling that the use of the currency could be limited because of the issues in preparing merchants to accept the digital payment method.

“We are targeting the end of this month and that will be with the one wallet provider that we have in place,” Mario Griffiths, director of payment system policy and development department at the Bank of Jamaica, told an audience during the Jamaica Diaspora Conference 2022 last Thursday. The one wallet provider identified to roll out Jam-Dex at this stage is the National Commercial Bank Jamaica (NCB), which has been onboarding customers for the digital currency in recent months.

“How we expect or envision Jam-Dex to be utilised is mainly P2P (peer-to-peer), as well as with small and micro merchants, and these are merchants that have a presence on various websites as well as social media within Jamaica,” Griffiths added before pointing out that corner shops dotting the island are also being targeted for accepting the digital currency from individuals.

The BOJ has been working on the CBDC over the past two years.

“We are at the point where the central bank is ready and we are waiting on the commercial banks to be in a position to distribute the currency and to have transactions occuring in the currency,” Richard Byles, governor of the Bank of Jamaica, added, citing that all is in place from the central bank’s perspective to get the digital currency into circulation. Byles, however, indicated that there may be an issue.

“The merchants have quite a bit of work to do in order to accept it. So the POS (point-of-sales) machines that normally take the credit/debit cards, all of them have to be programmed to be able to take CBDC and that’s the challenge on the merchant side.”

Byles indicates that the point of sales machines are owned by the banks and they will do that transition. Efforts to ascertain the readiness of the machines from NCB proved futile.

The governor is hoping that as these issues are sorted out, Jam-Dex will become more acceptable as a means of payment, eclipsing cash as the preferred payment method in Jamaica in 10 years.

“I think they are going to co-exist together [Jam-Dex and cash] for a while, but hopefully, more and more we will see that the digital currency takes over and cash will become a smaller part of transactions,” Byles responded, when asked if he anticipates the digital currency will replace cash in the long run. Everyone who wants to use Jam-Dex will have to get a wallet from a bank, such as NCB’s Lynk. The central bank reiterates that the currency will only be legal tender “purely within our borders”. Tourists wishing to use the payment innovation will also need to acquire a digital wallet from a local bank.

“If a tourist comes to Jamaica now and wants to change their US dollars to Jamaican dollars, they can do so at a cambio or a bank, they can change it to Jam-Dex also and use it just as they would use Jamaican cash. So it’s up to them, I mean many of them use their debit and credit cards, so it’s not a big change for them, but if they want to use Jam-Dex they can.”

However, he said members of the diaspora won’t be able to send remittances in Jam-Dex.

“If a Jamaican member of the diaspora wants to remit, they have to remit through the usual way, but once it hits our borders, it can go through Jam-Dex immediately to the beneficiary. Eventually, I am sure that what will happen is that either the existing remittance agencies or new ones will make that system of transfer even more seamless and even more immediate,” Byles outlined.

“CBDC or Jam-Dex is going to be purely within our borders and it will be issued by commercial banks and other payment service providers, who know their customers. So remember, we have to be very careful how we allow financial flows to happen between persons or institutions that have ill-intent, for example, terrorism [financing] or money laundering. So, in our borders, all our commercial banks and payment service providers have to know their customers, so that anybody who wants to move money around, it will be from a bona fide customer to another bona fide customer. When you go beyond our borders, it becomes more difficult to establish who is bona fide and who is not. That is why every Jamaican bank has a correspondent bank in the United States, Canada, wherever, that is doing the KYC on those customers.