NASSAU, BAHAMAS — Credit card spending in The Bahamas increased nearly 60 percent during the height of the COVID-19 pandemic, while the use of digital currencies increased threefold during the same period.
The findings were reported in a new growth and recovery report produced by the Oxford Business Group with RBC Royal Bank Bahamas, which explores the country’s transition to a cashless society.
“Furthermore, 2020 saw the highest increase in real-time gross settlement (RTGS) transactions on record, signalling that digital infrastructure is increasingly prepared to handle digital payments. Although cheque elimination is set to take place by the end of 2024, in 2019-2020 there was a 40 percent reduction in the number of cleared cheques.
“This reduction has been more than offset by processing digital payments through the RTGS. Cooperation between commercial banks and financial institutions and the government has been the cornerstone of this progress,” the report claimed.
The report also noted that the Central Bank’s digital currency (or CBDC) Sand Dollar circulation has steadily increased since the introduction of a pilot programme in 2019 and nationwide implementation in 2020.
“The Sand Dollar represents a small fraction of total money in circulation (about one percent), and 28,000 eWallets use the currency, some 7 percent of the population. It was launched to accelerate financial inclusion, especially in the remote Family Islands, in the aftermath of Hurricane Dorian and during the Covid-19 pandemic.
“A CBDC can, in times of distress, be used to provide immediate relief to people in vulnerable situations and issued at short notice. Lack of clarity and technical complications during the launching of the Sand Dollar limited commercial banking and financial services participation.
“If CBDC is used inappropriately, it can compromise privacy and lower retail bank deposits, reducing credit and potential revenue for commercial banks,” the report noted.
For its part, RBC said that it had begun its pursuit of becoming a digitally-enabled relationship bank prior to the pandemic.
According to the press statement, “the bank has been making a significant investment in the channels it believes would be the future of banking across the region. These channels include an online platform and mobile app, a digital client advice centre, and comprehensive ATM networks.”
The bank also noted that in The Bahamas, client transactions have steadily shifted from the branch to self-service channels, with a notable surge driven by the Covid-19 lockdowns. The trend from cash to cards at point-of-sale devices continues to accelerate.
“The role of e-commerce in the economic digitalisation process and shift to a cashless society is critical. In addition to promoting the use of debit and credit cards, RBC in the Bahamas enabled customers to accept online payments through financial payment systems, such as e-commerce and point-of-sale (POS) systems.
“Additionally, RBC launched merchant services and e-commerce solutions like RBC EZPay and BusinessPay to help business clients grow and grow in a digital world,” the bank noted.