The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank of the Bahamas is targeting 2013 for implementation of a SWITCH payments infrastructure, its Governor yesterday telling Tribune Business this was part of a drive to “modernise” the financial system and bring “greater efficiencies” for the public and private sector.

Wendy Craigg told Tribune Business that the SWITCH infrastructure would be “one of the first items on the agenda” of the National Payments Committee, a body that will hold its first meeting in the New Year.

Explaining that this committee would bring together “all actors” within the Bahamian payments system, including the private sector, utility companies and government agencies, Mrs Craigg said it would also work on the development of Customer Initiated Transactions.

While a SWITCH would allow Bahamians to use their debit cards at any Automatic Teller Machine (ATM), rather than just those belonging to their particular bank, Ms Craigg said Customer Initiated Transactions would enable users to go online and make payments to any account - at any bank.

Currently, online payments can only be made to accounts at the same bank as the person initiating the transaction.

And Mrs Craigg disclosed that the Central Bank, together with the commercial banks and Bahamian broker/dealers, were also working to develop ‘real time’ settlement of securities transactions via the upgraded payments system.

The initiatives have already been backed by Bahamian commercial banks. Ian Jennings, Commonwealth Bank’s managing director, said yesterday: “It’s an exciting time for moving Bahamian infrastructure forward.

“These are things the Bahamian customer has been asking for for a long time, but there’s a lot of time and investment to get it implemented.”

Explaining that the National Payments Committee’s creation had stemmed from the passage of the Payments Systems and Bye-Laws Act earlier this year, Mrs Craigg said it would be a body that provides “expert input and guidance on the use and development of payment initiatives”, and their associated products.

The Committee’s first meeting is scheduled for early 2013, and the Governor said it was designed to bring all parties in the payment systems business together.

Apart from the Central Bank and Bahamian commercial banks, its membership will also incorporate insurance companies, the National Insurance Board, the utility companies, credit unions, broker/dealers, the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) and the Government and its agencies.

Those agencies will include the Ministry of Finance and Treasury, given that modernising the Bahamas’ payments infrastructure ties into the Government’s agendas of e-commerce, facilitating the online payment of government fees, and collection of due revenues.

“We want to ensure we are offering the public the services they require, and to help businesses operate more efficiently,” Mrs Craigg told Tribune Business.

“One of the things first on our agenda is the payment by SWITCH.”

She explained that a SWITCH infrastructure, apart from enabling Bahamians to use cash and debit cards at any ATM, could also allow persons to use debit cards for the payment of goods and services at retail stores. Essentially, it would create a unified payments infrastructure, as opposed to the bank-centric, isolated systems now in use.

Asked by Tribune Business whether the SWITCH would be implemented in 2013, the Central Bank governor replied: “We hope so. We’ve been discussing it with the commercial banks during the course of this year. We will look at options for the way forward.

“It’s very important, as it provides the consumer with a choice and is cost effective.”

Confirming the initiative, Commonwealth Bank;’s Mr Jennings said: “The commercial banks are working on some form of ABM and Point-of-Sale network, some form of SWITCH.”

And Mrs Craigg added: “One other element we will also be looking at in the near future is trying to determine how we get delivery versus payment.”

This function, which applies to the Bahamian securities industry and broker/dealers, is intended to provide for the simultaneous clearing and settlement of securities transactions - money and shares changing hands at the same time.

As for Customer Initiated Transactions, Mrs Craigg said this would avoid the costly, time consuming process where all payments have to be made to the person receiving them, then deposited to their bank.

Via the Automated Clearing House (ACH), this function will enable Bahamians to go online and deposit funds to the correct account, regardless of whether the other party uses the same bank or not.

“It’s a continuation of the modernisation of our payments space. It’s taking a little while longer than we’d like. The banks have to recalibrate their systems to facilitate certain types of transactions,” Mrs Craigg told Tribune Business.

“We’re looking at it from the standpoint of efficiency. It will reduce the use of cash, and make operations more efficient. We want to offer services to the public where they can function with greater efficiency.”