August 20, 2024 | Category: In the News/Media Releases
Imbert: Time for Trinidad and Tobago to go cashless
FINANCE Minister Colm Imbert is supporting moves by the TT International Finance Centre (TTIFC) to push Trinidad and Tobago towards becoming a cashless society.
He spoke on August 20 at the National Financial Inclusion Survey Report (2023) launch at Tower D, International Waterfront Complex, Wrightson Road.
Financial services ombudsman Dominic Stoddard revealed that 21 per cent of the population still does not use the formal banking system.
TTIFC CEO John Outridge said it is important to reduce that number, as increased financial inclusion is directly linked to a reduction in poverty and inequality.
“Financial inclusion provides opportunities for marginalised and low-income individuals to access formal financial services, such as savings, credit, and insurance.
“By empowering them with the tools to manage their finances and invest in income-generating activities, financial inclusion can help lift people out of poverty and reduce economic disparities.”
Pointing to a study by credit card company Mastercard in TT and Jamaica, Outridge said financial inclusion also promotes economic growth, as people can participate actively in the economy when they have access to financial services.
“Excess dependence on cash transactions in the economies of both TT and Jamaica was slowing economic growth by stimulating informality, increasing fraudulent activities and limiting financial inclusion.
“The study argued that the TT economy could grow by an additional 3.5 per cent if the country increased its electronic payments by 30 per cent over four years.”
He said the study claimed while cash was once a positive driver of economic growth, it has now become a constraint and generates additional costs.
Imbert noted on a recent trip to Denmark, he realised the majority of stores were cashless, and one store was even unable to provide him with change, as there was little cash in the cash register.
“All transactions are done online or physically with credit and debit cards or mobile wallets.”
He said this is in keeping with the trend across Europe and Asia.
“After that, I travelled to London, England, where I saw the active promotion of the use of credit and debit cards in their rail and bus network, where you simply tap your card on a monitor as you enter the station or bus, to pay for your travel.
“In supermarkets and department stores, self-check-out systems were preferred, with almost every check-out machine being cashless.
“In 2022, 46 per cent of real-time global digital transactions took place in India, and the nation has become the second-largest digital market in the world, closing in on China in first place.”
Pointing to the safety of going cashless, he said there is a collaborative move among government ministries to push a transition to a cashless society.
The transition will not be easy, though, as Stoddard pointed out some challenges stakeholders face.
He said trust in financial institutions is a major contributing factor while a Central Bank survey showed 44 per cent of the country has a low financial capability and 35 per cent of adults have been victims of financial fraud.
The lack of trust was reflected in figures from the Inclusion Survey Report, which showed that 25 per cent of households lacked access to formal financial accounts due to barriers such as documentation and high costs.
Imbert said, “Within this, nearly 41 per cent do not have sufficient funds to open and maintain an account, with 13 per cent citing a lack of necessary documentation as the reason for not having a financial account.
“In addition, 33 per cent believe they do not require an account.”
He said of those who use banks, more than 80 per cent save money at home, a practice he described as neither safe nor productive.
He also advocated the use of digital payment solutions, which he said offer greater convenience, security, and efficiency.
“Sixty-three per cent of all transactions are conducted in cash, exposing individuals to theft, loss, and mishandling risks.
“Mobile wallets, contactless payments, and online banking services can significantly reduce our reliance on cash and facilitate greater financial inclusion.”
Noting that 85 per cent of citizens do not own a credit card, Imbert said these challenges highlight the need for innovative solutions to promote financial inclusion.
He said he plans to speak with Education Minister Dr Nyan Gadsby-Dolly about the possibility of digital financial education programmes in schools as one such solution.
Noting the important role of micro, small and medium enterprises (MSMEs) in the transition to a cashless society, Imbert said, “The Ministry of Trade and Industry (MTI) is modernising its national e-commerce strategy to create an environment that facilitates and promotes e-commerce for local businesses to serve domestic and international markets.
“The Ministry of Finance, through our agency, TTIFC, has been working closely with the MTI to support the development and promotion of e-payment channels within the state, emphasising the facilitation of e-money and cashless transactions adoption.”
The survey revealed many MSMEs struggle with high borrowing costs, limited access to credit, and a lack of digital payment solutions, with 77 per cent of these businesses lacking a business bank account.
“To make matters worse, 86 per cent of these MSMEs exclusively rely on cash transactions, indicating a significant gap in the digital payment ecosystem,” Imbert said.
Gennike Mayers, co-owner of Spargassum, a company which uses sargassum seaweed to create a line of beauty products, told Newsday she witnessed the hesitation by consumers to move to a cashless society, particularly at their physical stores.
“We are also advocating for the digital payments but people seem to prefer to pay in cash, which is very different from overseas. We have shipped out products to clients in the US, Europe, and other Caribbean islands and they opt for the digital payments.
“But local customers have been very slow to adopt it.”
However, Iere Aroma founder Naomi Spencer said her vegan scented candle business is mostly cashless as it is online-based and payment is made before delivery.
“The main source of payment would usually be online transfers. I also think it is the safest option. I think it is a really great initiative and cashless is the future.”
The government, though, is well on its way to championing the transition.
The TTIFC has already partnered with the Licensing Division to provide digital payment kiosks at its Caroni offices.
TTIFC financial payment systems manager Desron Palmer said the kiosks have been well received and added dealing with cashiers at government offices will soon become a thing of the past.
“Other ministries have also engaged us (but) different ministries have different states of readiness. We have to look at their infrastructure, financing, and their human resource capacity.”
This story has been adjusted to include additional details. See original post below.
FINANCE Minister Colm Imbert is supporting moves by the TT International Finance Centre (TTIFC) to push Trinidad and Tobago towards becoming a cashless society.
He spoke on August 20 at the launch of the National Financial Inclusion Survey Report (2023) at Tower D, International Waterfront Complex, Wrightson Road.
Financial services ombudsman Dominic Stoddard revealed 21 per cent of the population still does not use the formal banking system.
TTIFC CEO John Outridge said it is important to reduce that number, as increased financial inclusion is directly linked to a reduction in poverty and inequality.
“Financial inclusion provides opportunities for marginalised and low-income individuals to access formal financial services, such as savings, credit, and insurance. By empowering them with the tools to manage their finances and invest in income-generating activities, financial inclusion can help lift people out of poverty and reduce economic disparities.”
Pointing to a study by credit-card company Mastercard in TT and Jamaica, Outridge said financial inclusion also promotes economic growth, as people can participate actively in the economy when they have access to financial services.
“Excess dependence on cash transactions in the economies of both TT and Jamaica was slowing economic growth by stimulating informality, increasing fraudulent activities and limiting financial inclusion. The study argued that the TT economy could grow by an additional 3.5 per cent if the country increased its electronic payments by 30 per cent over four years.”
He said the study claimed while cash was once a positive driver of economic growth, it has now become a constraint and generates additional costs.
Imbert noted on a recent trip to Denmark, he realised the majority of stores were cashless, and one store was even unable to provide him with change, as there was little cash in the cash register.
Pointing to the safety of going cashless, he said there is a collaborative move among government ministries to push a transition to a cashless society.
Noting the importance of retailers in this transition, Imbert said, “The Ministry of Trade and Industry (MTI) is modernising its national e-commerce strategy to create an environment that facilitates and promotes e-commerce for local businesses to serve domestic and international markets.”
He added, “The Ministry of Finance, through our agency, TTIFC, has been working closely with the MTI to support the development and promotion of e-payment channels within the state, emphasising the facilitation of e-money and cashless transactions adoption.”
The transition will not be an easy one, though, as Stoddard pointed out some major challenges facing stakeholders.
He said trust in financial institutions is a major contributing factor, while a Central Bank survey showed 44 per cent of the country has a low financial capability and 35 percent of adults have been victims of financial fraud.