BOJ working on universal access for cash cards
Michael Riley, who sells vape pens within the burgeoning cannabis trade in Negril, holds a cash card that provides him with flexibility, but only to a certain degree.
He doesn’t have a bank account, but uses ePay, a Mastercard-branded cash card issued by Alliance Payment Services.
“I can draw cash from the ATMs linked to three banks, but not all,” he said. “But at least I can use it almost anywhere down here in Negril, as long as the store shows the Mastercard sign.”
Many Jamaicans like Riley are unbanked but have access to some form of cash card. Those cards tend to work only at select payment portals, limiting access to digital and online transactions.
But come 2021, those cash cards will be tenable at any point of sale or ATM, due to the ‘national payment switch’ that the Bank of Jamaica is about to develop.
“They will work anywhere,” said Natalie Haynes, deputy governor in charge of banking, currency operations and financial markets infrastructure at the Bank of Jamaica, BOJ.
The BOJ is in the process of recruiting a tech firm to develop the ‘switch’, which the requests for proposals says is intended to “consolidate all electronic transactions and channel these transactions to one or more payment processors for authorisation and settlement”. The indicative project cost and financing were not ascertained.
Instead of being restricted to one or a few locations to load or withdraw cash, the switch will allow access for all cards, not just those issued by banks, to the hundreds of ATMs nationwide – no matter the institution that controls the machines.
The BOJ will also monitor the networks to ensure banks do not block access to certain card types.
However, Haynes does not foresee that emerging as a problem, saying it would not be in the banks interest to block access as the increased transactions would benefit the banks – a reference to the fees that card users are charged per transactions at ATMs and the merchant fees that apply to point-of-sales transactions.
The current system of electronic transactions functions with some level of interoperability forged decades earlier through the MultiLink network, which is owned by the banks and the sole building society.
This interoperability in what is a near $7-trillion market does not currently extend to most mobile cash cards. The lack of access even extends to mobile wallets linked to banks. These wallets are largely restricted to their own networks.
The current Electronic Retail Payment Services, or ERPS, market comprises four players – National Commercial Bank Jamaica, the provider of the NCB Quisk mobile money service; GraceKennedy Payment Services, which offers the GK MPay mobile wallet; Sagicor Bank Jamaica, provider of Sagicor MyCash; and Alliance Payment Services, which distributes the ePay card.
The BOJ said the existing payment infrastructure does not allow for direct access to authorised non-bank payment service providers. Further, the existing platforms operated by ERPS providers are not “interoperable”, which means the platforms do not facilitate payments operations across each network. For instance, a mobile wallet issued by a local bank will not necessarily be able to make withdrawals at ATMs belonging to another bank.
“A national payment switch should resolve the interoperability challenge by providing a central space where authorised retail payment service providers, whether banks or non-banks, can connect and clear payments safely and efficiently,” the central bank said in response to Financial Gleaner queries.
BOJ is acting on the premise that allowing equal access to payment will foster competition among institutions seeking to provide authorised payment services, leading to greater innovation.
“The expectation is that easy, secure, and convenient countrywide access will be the outcome for all users, irrespective of payment service provider, payment type or telecoms network,” BOJ said.
There is no estimate as to the number of persons who will benefit from the switch. It’s too early to make that assessment, the central bank said.
The most recent data on electronic transactions, published in the BOJ Payment System Oversight bulletin, estimated their value at $6.5 trillion between January and November 2019.
Some of Riley’s transactions are counted in that data, but only some.
He was slightly comforted when told about the BOJ’s plan to increase access points for his card, but remains sceptical.
“It will give me more options to make withdrawals – that is good, I guess,” Riley said. “But I imagine I will still be restricted to loading my card at a few MoneyGram locations.”