GOING cashless could reduce crime, provide greater financial inclusion, and help economic activity to be better measured, according to an economist lecturer.

“There’s money in the economy that we don’t necessarily know, so when we measure gross domestic product and we add up the consumption, and the investment, and the government spending, and the net exports that we the economists love to add together, we don’t capture the informal activity,” said Jevon Henry, an economics lecturer at The University of the West Indies (UWI), Mona, while discussing the benefits of Jamaica becoming a cashless society.

He explained that the measure of GDP is incomplete, so adding the informal activity through formalisation will result in the actual representation of Jamaica’s economic activity.

He said going cashless could lead to an increase in the level of activity because there will be fewer hidden activities. Dushyant Savadia, CEO of Amber Group, said apprehension about a digital trail may scare some people into preferring to keep cash, which is untraceable.

“When you are doing transactions online it leaves a digital trail of your expenses, and then it also opens up if you’ve not paid your taxes,” he said.

Understandably, consumers are uneasy about their data being harvested or tracked by big businesses, which can be a reason for others to opt out of digital transactions. However doing transactions online bring benefits, as Henry explained.

“If you’re going to buy something online you are now able to look at many options in online stores and be able to make better decisions. You are limited in your ability to physically go to stores.”

A report by the Caribbean Policy Research Institute (CAPRI), entitled Cheque in Increasing Access to the Formal Financial System and released in January 2022, said “only about 10 per cent of bill payments are done online or by telephone”.

“Paying bills in person at multi-transaction agencies incur a per transaction fee, whereas payment online is either free or less costly. Paymaster and Bill Express, the two most dominant such entities in Jamaica, charge $55 per in-person bill payment,” according to CAPRI’s report.

Using digital transaction channels also lead to reduction in the usage of cash, which also saves the Bank of Jamaica (BOJ) the time and money it pays to print currency. While the BOJ could not disclose the cost to print the new banknotes, according to its website “the cost of printing banknotes over the last three years (2019 – 2021) was approximately US$7 million per annum”.

The new polymer banknotes, however, are expected to result in cost savings for the central bank over time as the average useful life of the banknotes will increase by at least 50 per cent, thereby enabling the BOJ to order fewer banknotes and at a lower frequency in the future.

However with the increased usage of digital payment channels comes security risks which require ever more sophisticated means to detect and prevent. Power outages or a downed broadband connection also factor in. In many ways cash offers a level of monetary security that a cashless system does not. The push for Jamaicans to use less cash is also coming off the heels of safety and security concerns.

“To me, it would be less crime and less robbery,” said Terry, the owner of Terry’s Cosmetics in Springs Plaza, Half-Way-Tree, St Andrew. As a business operator she says she dreads transporting large amounts of cash and would prefer her customers pay digitally.

“When I have a lot of cash on me there’s a risk for me, too, to transport the cash.”

Adrienne Francis, a hairdresser in Kingston, believes having digital payments systems doesn’t stop a criminal from targeting you physically.

“The only thing they are going to do is to stick you with the gun and say, ‘Hey, transfer that to my account. And if you talk I’ll shoot you because I know where to find you because you work right here,’ ” she said.

Another primary benefit of a cashless society is financial inclusion. Many people in Jamaica, especially those in rural areas, do not have access to banking services or have a bank account. A cashless society could change that. As more mobile payment apps come on stream there will be lower know your customer (KYC) requirements.

“Once…people needed a whole long list of things to open a bank account in Jamaica and now you are able to get a low-risk KYC account that has fewer requirements, which means people should be able to access financial services easier,” reasoned Henry.

He explained that the reason for these accounts is to include people who are not yet using financial services.

But one of the drawbacks of this is access to devices. Savadia stated that the digital divide is also what’s holding the country back.

“Not everybody has access to the Internet or the tools to connect to the Internet….A lot people still can’t afford a fancy NFC [near-field communication] smartphone” he said. NFC is the technology in contactless cards, and the most common use of NFC technology in your smartphone is for making easy payments.

This digital divide could leave some people excluded from a cashless society.