JAMAICANS are rapidly shifting to digital channels to do transactions, shunning traditional approaches which are witnessing a significant decline in usage and popularity, according to data from the Bank of Jamaica (BOJ).
The data show that for the eight-year period 2015 to 2022 the number of transactions done through digital means more than doubled, moving from approximately 36 million transactions to just under 80 million. The value of those transactions has grown even faster, moving from $4 billion in 2015 to just over $11 billion in 2022.
And for the first six months of 2023 the growth has continued. According to BOJ data, the volume of digital transactions from January to June grew 8.3 per cent when compared to the same period last year. That as 40.3 million digital payment transactions were made during the review period versus 37.3 million such payments made a year earlier. As for the value of the transactions over the January to June period of 2023, that too has gone up 16 per cent, reaching $6.2 billion. In the same half-year period last year, it was $5.3 billion.
Digital payments refer to an electronic payment that occurs through digital or online means, without the payer or payee physically exchanging cash. The device to initiate the payment includes a computer, a mobile phone, or point-of-sale (POS) device, while the payment instrument includes an e-money product, payment-card product, credit/debit transfer, or other innovative payment products.
And it’s not just overall transactions which are growing as traditional payment services tracking the trend, adapt to consumers, developing digital payment channels while banks in the last decade have joined the fray, offering digital payment solutions through apps or online banking platforms. A deeper plunge into the data collected by the central bank shows consumers are also choosing digital over paper-based means to pay utility bills. In 2015 nearly two-thirds of utility bills were paid by customers walking into payment stores such as GraceKennedy’s Bill Express or Digicel’s Paymaster to pay bills. But by 2022 that was down to 46 per cent.
Then, in the first half of this year the shift was even bigger, with almost two of every three utility bills being paid digitally. In that period, for every $100 consumers paid for using utilities, $79 dollars was paid through digital means. In 2015 almost $53 of every $100 consumers paid for utilities was done digitally.
“The BOJ statistic is a reflection of what we have been experiencing also, but maybe a little more aggressive,” said Don Wehby Jr, CEO of GraceKennedy Limited, a conglomerate in the food and financial sectors. GraceKennedy operates Bill Express, a payment company. Its biggest rival, Paymaster, operated by Digicel, said it is due to the “ease, convenience and security”, with the shift which has been seen in recent years accelerated by the novel coronavirus pandemic between 2020 and 2022.
“We are growing and taking a lead position as the payment solutions landscape adopts a ‘digital-first’ approach,” Kevin Chin-Shue, general manager for Paymaster, said in an e-mailed response to queries from the Jamaica Observer about the trend. “Through our recently launched digital wallet, MyCash, our customers enjoy the best of both traditional and digital channels. Expanding into the digital realm has allowed us to add greater convenience and security to people’s lives, in addition to improving the way we interact with them and support their growing needs,” he continued. MyCash allows customers to make bill payments, send money across the country, and top up their Digicel phones.
For GraceKennedy, its GK One digital payment platform —which basically captures the financial ecosystem of the GraceKennedy Financial Group — has been seeing the growth as well. The app allows for GraceKennedy’s customers across its financial services entities to conduct remittance transfers, pay bills, and even apply for credit cards from the conglomerate’s First Global Bank. Wehby told Sunday Finance that the offerings on that platform are to be expanded further as consumers demand more digital payment options for convenience.
But while digital payment methods grow, Wehby said growth in walk-in customers at its GraceKennedy Money Services locations, where it operates the Western Union franchise alongside Bill Express, has been flat.
“But our digital remittances, that platform through GK One and other means of direct bank transfers using the Western Union platform, is also increasing significantly — it’s growing double digits,” he said. Close to 90 per cent of remittance transactions are still done by cash, but the transaction size has remained flat. However on the digital side, he said remittance transactions are growing “35 to 40 per cent”.
And for both GraceKennedy and Paymaster, the shift to digital payments is being spearheaded by the younger generation for their ease and convenience, unlike the days of up to two decades ago when people formed unending lines in the halls of payment providers and banks to do the transaction.
“At First Global Bank we have the online platform called Global Access and we have seen a significant increase in the use by our existing and new customers doing a number of things, including bill payments, transfer to pay their bills, and transfer to other banks. So yes, the BOJ numbers are clear. In addition, GraceKennedy’s insurance company GK General Insurance is also seeing a significant increase in is digital business, so I guess its very clear in terms of where the financial market is going,” Wehby pointed out. He said GraceKennedy is looking to capitalise on that revolution in the region, and has targeted Trinidad and Tobago and Guyana to launch its GK One digital transaction platform before the end of this year, subject to regulatory approval.
Both companies, however, note that with increased use of digital channels to move money the risk of cyberattacks has grown. Wehby said the company has made significant investments to mitigate these occurrences and has mandated that all GraceKennedy staff undergo training to minimise the risks of the company falling prey to those who exploit digital channels for financial gains.
“We have found that awareness helps us a lot,” Wehby stated.
“We make significant investments in website security so that our customers are assured that their payments and information are safe. Digital payments are the wave of the future, and as Jamaica’s pioneer in payment solutions we are taking another bold step, this time into the digital future with our customers,” Chin-Sue said in the case of Paymaster’s push to protect its digital platform.
That will be even more critical as Chin-Sue said the company “intends to come up with additional services that complement our existing product line [so as] to make Paymaster a one-stop-shop for consumers, both via traditional and digital channels”.