Cashlessness will benefit T&T economy, says Outridge

The lack of digital literacy awareness is hindering the country from moving into the digital transaction realm.

That’s the revelation by John Outridge, chief executive officer of the T&T International Financial Centre (TTIFC).

In an interview with Business Guardian last week, he said the National Financial Inclusion Survey Report 2023 illustrated that 63 per cent of general transactions are done in cash with people citing that they feel comfortable transacting in cash.

Concerning digital literacy awareness, Outridge said the report outlined that 56 per cent of the population lacks the knowledge to utilise mobile banking apps effectively.

In addition, he said respondents noted through various ways that general information given by the financial sector to help with accounts or resolve issues is often seen as cumbersome, confusing, and at times − unfriendly.

Another hindrance he pointed out, is that the financially excluded population has concerns about the security and privacy of digital transactions through the focus group sessions from the 2023 survey many financially excluded participants have concerns about both ATM security and digital transactions.

When probed further, he said participants of the survey shared that “I know nothing, or know very little, about online payments. I don’t have access to the internet; therefore, I can’t access online payment portals. I don’t have the required means for online payments. I don’t think online payments are secure. Paying in cash is much easier than paying on e-portals.”

Further, the report stated concerns about privacy and trust in digital payments highlight the need to better understand essential factors in payment services, including user security, information protection, and payment monitoring and recording.

Outridge noted, however, the government established a journey and a partnership with India, in 2016, where they had their own financial inclusion challenge and went through its demonetisation exercise.

“India is a very large population geographically and numbers-wise, and there was a heavy dependence on cash, and their biggest problem was, which is similar to Trinidad, you had a lot of people who lived in rural communities and operating in cash was not conducive, especially when one has to send money to families in remote places.

“India established the UPI, United Payment Interface, right, which acted as a real-time payment system targeted to the financially excluded. Fast forward now to 2022, over 46 per cent of all real-time payments globally are done in India, so that system has exploded,” he explained.

To push digital payment more, Outridge said TTIFC has been engaging with the banking sector and with the credit union sector.

“I think the credit union sector holds a lot of potential because you have, you know, a large percentage of the population that facilities with the credit unions.

Now, and more importantly, you’re seeing they’re looking for the ability to transact from their account, you know. I think there are a lot of opportunities opening up.”

Also, with the proliferation of local e-commerce platforms, like Food Drop, WeEat and TT Rideshare, Outridge indicated that there have been many changes happening on these platforms, especially since COVID-19.

“From the financial sector, you will realise almost all merchants now, or a majority of merchants, have tap-to-pay enabled.

And all cards that are issued in T&T, we have close to a million cards that are both debit and credit issued.”

“We have a population of 1.4 million. All those cards can be tapped and paid. So, you’re seeing a lot of movement, infrastructurally, policy-wide,” he disclosed.

However, Outridge noted that the biggest gap now is really around literacy and awareness.

“The economy would benefit from becoming cashless, as this would promote equality for everyone and reduce the use of cash, which lacks transparency in its usage. At the same time, he acknowledges that cash is a “delicate thing” for the average citizen.

He noted that with the rise in robberies carrying cash can be unsafe.

In terms of moving ahead with the digital platform, as it relates to government ministries, Outridge highlighted that so far the Judiciary, the Housing Development Corporation Ministry of Trade, The Environmental Management Authority , and the National Security, are utilising the platform created by the TTIFC.

In giving an update, the CEO said the Licensing Division is launching at the end of this month.

“This would be both for online transactions for, like, certified copies, student permits, the U-turn tickets, as well as doing self-service payment in Carni, Licensing Division. Recently, it was announced that Property Tax is now accepting bank payments.

TTIFC is now trying to engage with the different government agencies to get them ready to accept digital payments,” he detailed.

“Implementing digital payments in governmental and other financial services is essential for combating corruption and enhancing service performance, as well as financial accountability,” Outridge highlighted.

Outridge said he agrees with the National Financial Inclusion Survey Report 2023 that transition to a cashless economy relies on adopting the notion that a cashless economy does not mean the eradication of cash but rather, an increase in alternative payment options that do not require physical cash.

Lessons to be learned from other countries

According to the website www.diva-portal.org, Sweden’s cashless journey began in the early 2000s, and by 2005 Swedish banks began phasing out cheques in favour of electronic transfers, encouraging digital transactions as a more secure and convenient alternative The introduction of the mobile payment app Swish in 2012, developed by six major Swedish banks, marked a significant turning point. Swish allowed real-time, person-to-person payments via mobile devices and quickly became one of the most popular digital payment methods in the country.

The decline in cash usage: around 2015, Sweden’s reliance on cash began to drop sharply, with fewer businesses accepting cash and more consumers preferring card and mobile payments. By 2016, cash transactions accounted for only about 15 per cent of retail transactions, down from around 40 per cent in 2010 In 2017, the Swedish central bank, Riksbank, began exploring the concept of an e-krona, a central bank digital currency (CBDC), as a potential alternative to physical cash, given its declining usage.

Turning to Canada, the Canadian Payment Methods and Trends report outlined that the country’s efforts on a steady transition toward a cashless economy and factors such as consumer preferences and technology adoption have been a driving force in reducing the population’s reliance on cash.

Some key insights were shared:

• By 2021, the volume of cash payments declined by 62 per cent over the previous five years. The COVID-19 pandemic also accelerated people’s use of digital payments.

• Cash usage also declined as the preference for debit and credit cards for low-value transactions at POS increased.
Canadians found that paying in cash is less convenient.

• Since the pandemic, contactless payments grew considerably through contactless card payments, mobile wallets and Interac e-Transfer payments.

• Created in 2003, Interac e-Transfer, provided by Interac (a Canadian Interbank Network) is a digital payment service in Canada that allows individuals and businesses to send and receive money directly from their bank accounts via email or text message.