Survey finds cash still most widely embraced accepted means of payment, with cryptocurrency and mobile wallets the least accepted
NASSAU, BAHAMAS — Both acceptance and use of electronic payments increased in The Bahamas in 2020, according to a survey commissioned by the Central Bank, which also found that 64 percent of businesses surveyed believed fees charged by financial institutions require major improvements.
The survey was administered online last November to collect feedback on how domestic entities make and receive payments, and to determine the need in the business community for a more widespread digital payments infrastructure. A total of 364 completed responses were received, with the largest share of identified sectors including businesses in the wholesale and retail segment.
“Although insights were not queried on how each transaction volume shifted in comparison to 2019, there were indications that on net, revenues received through electronic payments (channels other than cash or cheques) increased during 2020,” the regulator noted.
“Additionally, respondents noticed increased interest from customers to use electronic payments. As to accepted means of payments, cash was still the most widely embraced, with the least accepted instruments being in the emergent categories of cryptocurrencies and mobile wallets.
“In particular, only about 13.7 percent of entities accepted no form of cash payment, while two-thirds indicated that cash represented about 10 percent or more of their receipts. Still, less than 10 percent of businesses realized all of their revenues in the form of cash.”
The Central Bank also noted that when asked to give their opinion on the level of changes or improvements needed in the current state of digital payments in the country, 64.3 percent of businesses said fees charged by financial institutions required major improvements.
“Some 52.7 percent said major changes were needed with respect to potential to fraud and 51.3 percent indicated that the security of technology required major improvements,” the regulator said.
“Additionally, 46.4 percent said major improvements were needed with respect to convenience and volume of customer interest and 43.4 percent noted that readiness of POS and receipting systems needed major changes.”
It was noted that while the use of cash and cheques still represent among the largest individual components of payments, they do not markedly outdistance digital transactions, which are predominantly electronic bank transfers and credit and debit cards.
“In this regard, businesses increased their net usage of electronic payments, both for revenue intake and expense outlays,” the regulator noted.
“In instances where albeit a minority of firms were less receptive to use or accept electronic payments, reasons varied. Among these are merchants considering the fee structure for such services to be too high. However, cost concerns collectively mattered less than other factors, such as access to such services within existing financial services relationships, fraud and cybersecurity or the speed of payments settlements.”
The regulator concluded that based on the survey’s results, both acceptance and use of electronic payments increased in the Bahamas during 2020 while cash and cheque usage declined.
“Moreover, using outlays as an indicator in the business-to-business space, the cash usage rate was lower than for cash receipting, more indicative of the flow of consumer to business payments,” the Central Bank said.
“Most businesses and entities participate on some level in electronic payments. Where it was indicated that usage was not yet the case, such as with the online banking transactions for some entities, cost considerations ranked lower in aggregate than collective concerns over speed of settlements, fraud and, in some cases, access to the convenience.
“These findings provide some strategic insights into national approaches that can be crafted to promote accelerated reduction in the use of cash and cheques in domestic payments.”
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