Tap mass culture to unlock wider mobile money adoption

Incentivising consumers to use digital currency in a few cash-heavy sectors, including transportation, lottery sales, liquor purchases, or linking to the National Identification System (NIDS), could help drive wider adoption of Jamaica’s stalled JAM-DEX platform, experts said at a forum.

One proposal that emerged during the discussions was for lottery operators to offer higher payouts to winners who agree to receive their prizes digitally.

“That is one of the best suggestions in terms of getting people to use JAM-DEX,” said Dr Andre Haughton, professor of applied macroeconomics and international finance at UWI Mona, speaking at a forum titled ‘Cash is King: Mobile Money Adoption and Digital Payments in Jamaica’, staged by the Department of Economics at UWI Mona last week.

He suggested that the Bank of Jamaica could subsidise enhanced lottery payouts as a way to stimulate economic circulation through digital channels.

To better align the technology with commercial needs, Haughton said he plans to conduct a survey of local merchants to determine the infrastructure and financial incentives they would need to reduce their reliance on cash.

Haughton was among a panel of economists and financial experts at the forum, where researchers argued that targeting everyday, working-class transactions is critical to achieving mass adoption of digital payments.

JAM-DEX VERSUS DEBIT CARDS

The economists want to reverse the sluggish roll-out of JAM-DEX, Jamaica’s central bank digital currency. Despite its high-profile launch in 2021, the digital dollar has made little impact on the country’s cash-based economy. As of June, JAM-DEX accounted for $290.65 million of Jamaica’s $311.34 billion in currency circulation, representing about 0.09 per cent of the total.

For consumers, the primary advantage of JAM-DEX over electronic payment methods such as debit cards is that it carries no transaction fees. It also allows instant phone-to-phone payments and is accessible to users regardless of whether or not they have a traditional bank account. Registration is relatively simple, requiring only a smartphone and valid identification.

OVERCOMING THE TRUST DEFICIT

Jevon Henry, an assistant lecturer in the Department of Economics, noted that other emerging economies have successfully used neighbourhood shops as trusted access points for digital financial services. He added that planned updates to legislation governing NIDS could reduce regulatory friction and support wider use of platforms such as JAM-DEX, Lynk and WiPay.

The push for greater digital adoption faces a significant psychological barrier, according to Henry.

His 2023 study of 455 adults found that entrenched cash-use habits and deep distrust of public institutions continue to weigh on adoption. Many respondents said they feared digital funds could disappear without clear avenues for refunds or regulatory recourse.

Early growth in user registrations has also proved shallow. Many Jamaicans signed up for JAM-DEX primarily to collect the $2,500 registration incentive and abandoned the platform shortly afterwards, according to Henry, who conducted the study.

To close that trust gap, Henry said commercial banks must move beyond a passive branch-based model and engage directly with unbanked citizens in their communities.

“Banks should not wait for people to come to them,” Henry said. “They should deploy agents to churches, parent-teacher associations and senior citizen groups, opening accounts directly in communities in the same way telecom providers Flow and Digicel market their services.”

AN INSTITUTIONAL LAB

Central bank representatives at the forum expressed openness to a strategic shift, including a proposal to transform the UWI Mona campus into a “living laboratory” where merchants, staff and students would conduct transactions exclusively through digital currency.

The state-backed platform’s slow progress contrasts sharply with the growth of online banking in Jamaica’s private sector.

ONLINE BANKING

Sheree Martin, chief executive officer of National Commercial Bank, recently said active consumer enrolment in online banking has risen 270 per cent since 2019, increasing from 110,000 to 297,000 users. Active business usage also expanded, with online penetration rising from 28 per cent to 49 per cent over the same period.

Translating that private-sector momentum into adoption of the Government’s digital currency remains a challenge, however.

“The Government genuinely does not understand how to go about understanding the issue,” Haughton said of current public education efforts.

luke.douglas@gleanerjm.com