The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Private sector leaders yesterday hailed the Central Bank’s planned 2013 electronic payments initiatives as “long overdue”, adding that the Bahamian commercial banking system was 20 years behind Canada in the adoption of such technology.

Chester Cooper, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, called on the banking sector to be “more proactive” in embracing technology that had the potential to increase efficiency and reduce the cost of doing business.

Noting the irony in that the Canadian parents of many Bahamas-based banks had embraced technology such as a SWITCH two decades ago, Mr Cooper said giving Bahamian entrepreneurs the ability to pay online could create new industries, such as logistics and fulfillment centres.

And, noting the relatively low penetration of debit card usage in the Bahamas, compared to the likes of the US and Canada, the BCCEC chairman said the banks “could be more aggressive” in driving this nation to a ‘cash-less’ payments system.

Adding that this might also help to reduce fraud and armed robbery-type crimes, Mr Cooper pledged that the BCCEC would meet with the Clearing Banks Association (CBA) in the New Year in a bid to tackle the “many ‘vexing business issues’” related to the banking sector.

The BCCEC chairman was speaking out after Tribune Business exclusively revealed that the Central Bank, in conjunction with the CBA, is aiming to roll-out a SWITCH payments system in 2013.

Central Bank governor, Wendy Craigg, confirmed the move, which if implemented could allow Bahamians to use their cash and debit cards at an Automatic Teller Machine (ATM) in the Bahamas.

The SWITCH could also lead to the creation of a nationwide ‘Point-of-Sale’ network, giving Bahamians the ability to pay for goods and services using their debit cards, rather than having to carry huge amounts of cash with them.

In addition, the Central Bank and CBA, with input from other payments systems stakeholders, are also working on ‘payment versus delivery’ and Customer Initiated Transactions.

The former will benefit Bahamian broker/dealers and the capital markets, the intent being to ensure that the transfer of shares - and the payment for them - happens simultaneously.

And, when it comes to Customer Initiated Transactions, these will allow Bahamians and businesses to make payments online regardless of which bank the receiving party’s account is at.

Responding to these developments, Mr Cooper said: “This is long overdue! We commend the Central Bank on the 2013 target for the SWITCH.

“The Bahamas is many, many years behind the ‘normal’ adoption of banking technology and standards available in other markets. Twenty years ago, the banking systems in Canada were at this level.

“The irony is that ATM transactions between two banks in a small town in Canada were possible 20 years ago. These same banks with operations in the Bahamas are waiting on the SWITCH. The clearing banks can be more proactive in driving technology to improve the customer experience, create efficiency and reduce the cost of doing business. Too many banking processes themselves are far too manual and onerous.”

Indicating that the payments system plans, if implemented, would improve the Bahamian economy’s competitiveness, Mr Cooper added: “The overall retail banking system in the Bahamas is lagging its international counterparts in terms of their processes and general adoption of e-commerce.

“The ability to pay online in a hassle free manner can drive a new class of entrepreneurs for the Bahamas, like centralised logistics and fulfillment centres. Small business can benefit greatly from the facilitation of online transactions, without having to have some unnecessary overhead costs.

“Even the penetration of debit cards is extremely low relative to the neighbouring US and Canada, for example,” the BCCEC chairman said.

“The excessive charges for ‘withdrawing our own money’ is prohibitive and discourages the move to a more paper-less system. Give the fear of crime, both fraud and blue collar, there is a longstanding view that the banks could be more aggressive in driving these initiatives.

“There are many ‘vexing business issues’ affecting the business community with respect to banks, and we will be meeting with the head of the Clearing Banks Association early in 2013 to advance the dialogue.”

Mr Cooper was backed by BCCEC chief executive Winston Rolle, who told Tribune Business that it was vital for the Bahamas to have electronic payments systems that matched those of other countries if it was to be “globally competitive”.

Pointing out that it was just as important for government-related transactions and payments to be conducted online, Mr Rolle said of the initiatives: “It does sound fairly promising, and for debit cards to be used progressively throughout the country we need the cost for merchants set at affordable rates, so even smaller merchants can have debit card machines.”

He added: “We would have heard a number of businesses complaining about being unable to do business electronically, especially as it relates to receiving funds from website sales.

“These initiatives are going to mitigate a lot of those challenges, and move us into an environment where business can - and should - be done from anywhere.

“It reduces the cost of business because there is less human interaction. When you talk about conducting transactions from a website, that means businesses can be open for 24 hours a day.”

Mr Rolle said earlier improvements had reduced the time for processing cheque payments from seven to two days, and the latest planned upgrades would result in funds being transferred to the receiving account overnight.

“For us to continue to compete globally, we have to have similar systems in place to everyone else in the world to facilitate how business is conducted,” Mr Rolle told Tribune Business.

“The different ways of conducting trade do not require a physical presence, so the only way to move funds around is through electronic payments.”

Agreeing that implementation of the SWITCH and associated initiatives should improve the Bahamas’ Ease of Doing Business ranking with the World Bank, Mr Rolle said execution would be critical.

“Another key thing is how many of the Government-type transactions will be conducted in this manner,” he added.