MORE THAN 83 per cent of transactions at Jamaica’s automated banking machines (ABMs) involve withdrawals of $25,000 or less, highlighting the dominance of small-value payments in the island’s banking system, data from JETS, the company managing the MultiLink network, show.

The data provide a snapshot of transaction trends at Jamaica’s ABMs. They show that 42.46 per cent of all withdrawals range from $100 to $5,000. Transactions above $5,000 up to $25,000 account for 40.49 per cent of all withdrawals. This suggests that the majority of Jamaicans are using ABMs for everyday transactions, rather than for large-scale cash withdrawals.

According to Edmundo Jenez, CEO of JETS Limited, the dominance of small-value payments at ABMs was a key factor in the decision to reduce the withdrawal limit to $100,000 last year.

“The demand for cash through the network is really for people who need a small amount of cash,” Jenez said in a recent interview.

“We had to balance the needs of our customers with the need to prevent the machines from running out of cash too frequently.”

Jenez also noted that while at the network level, withdrawing over $100,000 for a single transaction is no longer allowed, each bank can decide how much they want their customers to withdraw at any one time at their proprietary machines.

He added that while the reduced withdrawal limit has helped to alleviate some of the pressure on the ABM network, there are still some customers who require larger cash withdrawals. However, these customers make up a tiny fraction of overall transactions, accounting for less than 2 per cent of all withdrawals.

“The people wanting $100,000 and more, they are a very tiny lot, but very powerful,” Jenez said.

“Theoretically, a card could withdraw $200,000 because machines can dispense up to 40 notes at a time. However, such large withdrawals drained machines faster than they could be reloaded. As a result, the limit was cut in half to $100,000. People needing large cash withdrawals must now find alternative means,” he added.

Jenez said that unlike in 2023 when consumers were clamouring about ABMs being out of service or out of cash too frequently, the situation has improved significantly in the past several months.

The shift towards smaller-value transactions at ABMs is also driving changes in the types of banknotes being dispensed by the machines. Jenez noted that the increasing demand for higher-denomination notes is leading to the phase out of lower-denomination notes, such as $100 bills. In fact, only 66 ABMs were still dispensing $100 notes at the end of October 2024.

“Eventually, you won’t see any $100 in ABMs over the next several months to a year or so,” said Jenez.

The $50 notes were phased out of the ABMs some time ago.

The trend towards higher-denomination notes is also being driven by inflation, which has reduced the purchasing power of smaller banknotes. As a result, ABMs are increasingly dispensing $500, $1,000, $2,000, and $5,000 notes, which are becoming the new standard for cash transactions in Jamaica. This shift is likely to continue as the Bank of Jamaica works to improve the efficiency and reliability of the ABM network, which has seen significant improvements in recent months, following the issuance of ABM standards for deposit-taking institutions (DTIs) to follow.

The improvements in the ABM network have been notable, with the number of machines in operation increasing to 855 at the end of October 2024, out of a total of 900 installed. At that level, 95 per cent of all installed ABMs were operational, much better than the minimum 90 per cent required by the central bank. This represents a significant reduction in the number of out-of-service machines, which had been a major source of frustration for customers in the past.

“We continue to work closely with the DTIs as they roll out their action plans that would see them bringing themselves into conformity with those standards. Several of them did ask for some extensions, given the impact that Hurricane Beryl had on their operations. I’m happy to say that most of them have recovered quite nicely, and in terms of their wider performance, we have seen improvements and so anticipation is that they will be able to, in the first quarter of next year, pull themselves into full compliance with those standards,” Jide Lewis, deputy governor, Financial Institutions Supervisory Division at the Bank of Jamaica said in the central bank’s press briefing in November.

Apart from requiring a minimum of 90 per cent of the ABMs to be operational, the central bank requires those in operation to be dispensing cash 95 per cent of the time.

“Banks haven’t reached the standard as yet…They are currently operating at around 89 per cent to 90 per cent, so there is still room for improvement there,” Lewis added.

However, there has been improvement in recovery time, with the average time to restore service dropping from six hours to three hours.

“The measure in terms of recovery time, we have noticed that that recovery time has fallen… and that’s heading in the right direction. It’s still not at the one hour for urban and it’s at the three hours for rural.”

JENEZ….the demand for cash through the network is really for people who need a small amount of cash.