Contactless payments strongly encouraged especially amid pandemic
NASSAU, BAHAMAS — The Central Bank has begun consultation on a strategy to eliminate the use of all domestic cheques by the end of 2024, a move one local fraud expert described as a possible “game-changer”.
The regulator yesterday said it has begun consultations with banks, credit unions and other payment services providers on the matter.
The COVID-19 pandemic also fueled increased demand for non-cash and contactless payments, setting the stage for faster change.
– The Central Bank of The Bahamas
“Renewed focus on cheques follows discussions with the Ministry of Finance and Clearing Banks during 2020 to set five-year targets to achieve a significant reduction in the use of both cheques and cash in The Bahamas,” the Central Bank said.
“In The Bahamas, electronic fund transfers and other non-cash transactions are increasingly substituting for cheque payments.
“It reflects both payer preferences and deliberate decisions by recipients — individuals, business and the government — to discontinue acceptance of cheques.”
The regulator added: “In addition, the fee structure for electronic settlements has favored non-cheques, with the Bahamas Automated Clearing House (BACH) charging more for cheque settlements than for other fund transfers.
“The COVID-19 pandemic also fueled increased demand for non-cash and contactless payments, setting the stage for faster change.
“In the meantime, mobile wallet payments are poised for greater adoption, providing more financially inclusive and interoperable substitutes, enabled by the Central Bank’s digital currency, the Sand Dollar.”
The Central Bank noted that its elimination strategy also proposes to provide adequate public education around the use of digital alternatives, and consider positive and consistent pricing incentive structures across the financial sector.
“Also to be tackled are residual issues around the legal clarity of settlements that are projected increasingly to be instant or faster in nature; around the finality of the process; and the recourse of payers and payees in the event of errors or fraud,” the regulator noted.
Kendrick Christie, managing partner of K Christie & Co Chartered Accountants and Fraud Examiners and president of the Association of Fraud Examiners (ACFE) Bahamas Chapter, told Eyewitness News: “This is a good measure and a possible game-changer and efficient for businesses and individuals.”
They call for cheque pickup and deposit on long bank lines. In the pandemic age, this is highly a risky activity.
– Kendrick Christie
According to Christie, cheques are inefficient and call for physical signatures that can be forged.
“They call for cheque pickup and deposit on long bank lines. In the pandemic age, this is highly a risky activity,” said Christie.
“Cheques also are susceptible to fraud and cheque float fraud, where persons deliberately float a cheque knowing their bank account cannot cover the cheques.
“The elimination of cheques will help cash flow for businesses. Funds sent via bank accounts, the Sand Dollar, digital bank-like wallets and crypto are transferred almost instantly and business can transact more quickly due to more cash on hand.
“The elimination of cheques cuts down on costs and reconciliation.”
Christie added: “We at ACFE Bahamas, part of a 90,000 worldwide body Association of Fraud Examiners, support this Central Bank objective wholeheartedly as one of the measures to bring The Bahamas into the digital age and increase the efficiency of businesses while reducing overall fraud the same time.”
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