Slow rollout of digital wallets, merchant acceptance hobbling Jam-Dex
Published:Wednesday | August 23, 2023 | 12:05 AM
The amount of Jam-Dex digital currency in circulation remains static at $257 million, due to what Bank of Jamaica Governor Richard Byles says is the slow rollout of mobile wallets by commercial banks.
But large merchants also need to make adjustments to their point-of-sale systems to accommodate the currency, he said.
“We need to have the merchants in a position to accept it. We are finding that current POS machines that larger merchants have need to be adjusted to take the Jam-Dex QR code. We are working on that,” Byles said Monday at his quarterly press briefing on monetary policy.
“Jam-Dex deployment has also been slowed by the slow rate at which commercial banks develop digital wallets in which Jam-Dex can be used.”
Regarding the first issue, relating to the development of digital wallets, Byles said it was a costly investment, ranging between US$300,000 to US$500,000, which translates to about $46 million to $78 million in local currency.
“They also had to invest in equipment,” he added. “The boards of each bank will want justification, especially since they are not expected to earn fees off using Jam-Dex.”
When the Bank of Jamaica launched its first test of Jam-Dex only the Lynk wallet owned by National Commercial Bank Jamaica participated in the pilot.
Last December, JN Bank was also approved as a wallet provider to distribute Jam-Dex, but not much has been heard about it since.
On Monday, Byles sought to pitch Jam-Dex as a cheaper cash-management tool for banks.
“One of the largest expenses that a bank has is the management of cash. One of the biggest headaches is the movement of cash. Digital currency will reduce this cost. In the short term it will impact profit and loss but in the long term deliver real savings.”
In terms of wallet development, Byles said: “There is one [commercial bank] which is ready to roll, and another is doing testing. There is also another coming.”
The central bank is trying to get merchants on board before rolling out a mass campaign for consumers to start utilising the digital money.
“There is no point in people having it if they cannot spend it,” Byles said.
To date, some 200,000 individuals have utilised Jam-Dex for transactions with 10,000 merchants. Additionally, smaller merchants, numbering about 200, who use their phones for transactions instead of POS machines, had been onboarded, the central bank governor said.