The Bank of Jamaica (BOJ) has successfully completed the pilot of a dynamic QR code to allow for Jamaica’s central bank digital currency (CBDC) Jam-Dex to be accepted by merchants at point of sale (POS) machines, but there are further delays which will slow the roll out to the public.

Jam-Dex (Jamaica Digital Exchange) is a CBDC which is entirely digital and became available to the public in July 2022. The BOJ has so far minted Jam-Dex seven times with the current amount in circulation at $257.41 million. However, TFOB (2021) Limited, the operator of the Lynk mobile application and only digital wallet that can process Jam-Dex, is noting that uptake for the CBDC is quite anaemic compared to the rest of the functions in the app.

An issue that the BOJ identified was that many merchants would prefer to use a single POS machine to handle all payments than to have a separate device to handle Jam-Dex. The BOJ has been working with a technology provider since last year to get at least 10,000 POS machines modified to take Jam-Dex with a dynamic QR code.

“The dynamic QR code was implemented to allow persons to use Jam-Dex at POS machines. BOJ, couple months ago, went ahead to develop that system with a technology provider in our sandbox. [We] tested it, and it worked. However, wallet providers, the existing ones, are not yet fully ready with their technological changes required to implement that fully at the point of sale for the merchants. We’re working on that,” said BOJ deputy governor Natalie Haynes at the August 21 quarterly briefing.

Bruce Bowen, chief executive officer of National Commercial Bank Jamaica Limited (NCBJ), noted in a discussion that possibly considering paying people in Jam-Dex and having other banks launch their digital wallet to encourage more transactions in the financial system using the CBDC.

JN Bank Limited was onboarded as a digital wallet provider in December 2022 and Sagicor Bank Jamaica Limited being added in August 2023 as the other digital wallet provider. Christopher Zacca, president and CEO of Sagicor Group Jamaica Limited, noted that they are in the later stages of the first release of their digital wallet which will include CBDC and its recently launched prepaid card. There has been no general update by JN Bank on its digital wallet.

“The lack of access of the community in many instances to cash causes the commercial banks to have a pretty bad reputation. The central bank digital currency, or Jam-Dex, is one way to ease the pressure off of the use of cash. It’s not to say that you’re going to replace all of cash, but it will pull down the amount of cash that is required by [bank] customers generally. We are in constant dialogues with the commercial banks to justify to them what is the value of Jam-Dex. We think that we are making some progress, and we look forward to further engagements with them on it,” said BOJ Governor Richard Byles on the consideration for Jam-Dex as a way to help reduce the costs associated with cash in the economy.

Byles further added, “It has been a long process and partly because we are at the forefront of trying to do this globally. It is one of those projects that have a lot of value in the long run, and it is for the banks, as we have done, to see the long-run value in it.”

Although most transactions in Jamaica are completed through digital mediums, about 80 per cent of transactions by the general populace is handled through physical cash. According to the Economic and Social Survey Jamaica 2023, published by the Planning Institute of Jamaica, there were 53.8 million Jamaican dollar (JMD) ABM (automated banking machine) transactions in 2023 which totalled $774.2 billion across 908 ABMs in Jamaica. 66.3 million JMD transactions were processed across 28,899 POS terminals which handled $1 trillion in transactions during 2023.

“In other countries, it’s not a central bank initiative. It really is a like a telecom initiative. They do it and earn significant fees for doing it. Maybe the lesson out of that is that fees are important for the institutions to be motivated and that the convenience of it, however, even with a fee, is such that the population gravitates to it. A lot of those countries are very successful in it, and I think that we should adopt those lessons here. We at the central bank are open-minded on the issue of fees. We don’t want it to be onerous, but I would want to say that we are prepared to sit and discuss that, and I think the banks need to be open-minded too,” Byles said.