BANK of Jamaica Governor Richard Byles has expressed disappointment with the level of take-up of its Jam-Dex central bank digital currency so far, saying he is “impatient” to get the project on the road after attracting only two wallet providers to date – the NCB Financial Group owned Lynk digital wallet and the Jamaica National Bank’s JN Pay digital wallet. The BOJ boss said the bank is now pushing to have more wallet providers to distribute the digital currency while ensuring that the merchant base is sufficiently large so that individuals could actually use it.

NCB launched its digital wallet Lynk through its digital company, The Future of Business (TFOB) in December 2021, ahead of the Jam-Dex launch in July 2022. However, JN Bank is yet to launch its own JN Pay digital wallet. JN Bank was initially hoping to launch the wallet in March this year, but changed that timeline to “mid-2023”, but is yet to launch even with the second timeline passing though it is expected to “start distributing shortly”. A third wallet provider is about to start testing its product ahead of launch.

“We are not where we wanted to be and we have come across challenges that we didn’t foresee in the beginning,” Byles told reporters at a BOJ monetary policy press briefing on Monday as he expressed his disappointment amidst the hope when Jam-Dex was launch a year ago that more merchants and wallet providers would have signed on by now.

So far, apart from just a single wallet provider being in the market, a total of 10,000 merchants have been onboarded to accept Jam-Dex, while over 200,000 individuals now have the capacity on their phone to pay for services and goods with the central bank digital currency, the BOJ governor acknowledged. The central bank’s data show that about $257 million in digital currency is in circulation.

“As you can imagine, the big hurdle to overcome or the goal to achieve with issuing a new currency like Jam-Dex is that you need to have the merchants in a position to accept it so that when individuals like you and I go to them, they have the capacity to accept the currency from you,” he continued.

“Once that happens, it means that every supermarket, every fast food enterprise, pharmacies, all the merchants that you and I go to several times and spend quite a bit of money with, they will be able to take Jam-Dex. At that point, we will start a big mass campaign to get individuals to take Jam-Dex on their phones and to begin to use it as currency,” he said as he added, “There’s no point in people having it if they can’t spend it.” Jam-Dex is the digital form of the Jamaican dollar.

However, Byles outlined that there is a challenge when it comes to developing the digital wallets which consumers will use to spend Jam-Dex.

“The fact is that it costs quite a bit of money for the banks to develop their wallets and only the technology people can tell me why it costs so much because it’s just amazing. Some banks tell me [it costs] US$300,000 and [others say it costs] US$500,000 [to develop the digital wallet].”

“But apart from that they also have to invest in the equipment to be able to move the digital currency around. So, it is for the banks a significant investment. I would say not a tremendously expensive one, but it is significant, and it is the kind of investment that the board of a bank would want to hear you justify,” the former Sagicor Jamaica head outlined, adding that it is sometimes hard to justify the expenditure “especially since it is not expected that when we use Jam-Dex [the banks] will earn a fee off it.”

Still he points out that one of the largest expenses that a bank has, especially the large retail banks, is management of cash which Jam-Dex, being a digital currency, can help to solve.

“One of the biggest headaches that they have is the movement of cash and one of the prospects of the digital currency is that it will reduce this cost and reduce this headache,” he said.

Turning to merchants, he proferred a similar argument for them to make the investment to accept the digital currency.

“One of the biggest expenses for most retail enterprises is handling of cash, the storage of it, the transportation of it. So even the business enterprises will benefit from the existence and the usage of digital currency. And so there are long-term benefits to be reaped from this initial investment and that is what I keep saying to the banks, I want to encourage them. This is an investment not for tomorrow’s profit and loss, this is an investment to deliver better service in the near term as well as to improve your profit and loss in the medium term.”

He said the bank is working with retailers to get the POS machines ready “even as we speak”. Smaller merchants are being targeted at the same time with cellphone technology to help them get ready to accept the digital currency as well with the BOJ governor declaring that so far “we have a significant number of them who are now in a position to do so.”

Melanie Lawes, head of external communications and protocol at the BOJ, who is also responsible for the communications drive around Jam-Dex, outlined some of the successes so far.

“We do have several thousand small merchants who are capable of accepting Jam-Dex,” she said, adding that the list appears on the BOJ website.

“We have also been successful in signing on smaller merchants at several of our communications initiative including the Independence Village which took place between August 1 and 6, Christmas in July, FunFest, the Liguanea Art Festival and we have been particularly successful in the entertainment sector in terms of the parties that we have done. We have thousands of people who signed up for Jam-Dex and are able to pay for their party tickets and at the bar with Jam-Dex.”

Government commitment

Byles said talks are also ongoing with the Government for its ministries, departments and agencies to start accepting Jam-Dex as a means to help proliferate acceptance of the currency.

“We have a Government that is committed to digital transformation…[including] to make Jam-Dex successful so that there is ease of purchase [and to] get away from the coins, [and] be able to pay remotely, all the advantages that are involved in digital payment, even though we are not giving up cash, but we want a substantial amount of purchases to be on a digital basis.”

The Government has so far given support to Jam-Dex with the Ministry of Finance setting aside funds to help the BOJ to onboard small merchants to use the currency.

“We are now speaking to other agencies of Government that handle taxes and that make payments whether it is PATH payments or pension payments, so we have a large player in the form of the Government that is proactively assisting us, as well as our own efforts to go out there and get these POS machines reconfigured so that they can accept the Jam-Dex QR codes,” he continued.

“There is no objection in principle at any of these institutions that we have been speaking to, whether it is the TAJ, Accountant General, e-Gov, and so on. They all are open-minded to it and it is really just a matter of looking at what are the technical challenges that we have and how to resolve them, and that is what we are currently doing.”

The BOJ governor refuses to put a timeline on when the Government will be fully on board with the acceptance of Jam-Dex but outlined: “I am impatient to get this project really on the road and so we are going to be pushing as hard as possible.”