The Tribune

By NEIL HARTNELL

and YOURI KEMP

Tribune Business Reporters

Digital payments providers yesterday forecast "significant growth" for the sector next year as the Central Bank confirmed that the bar on new market entrants will remain in place until end-2021.

The regulator, in a statement, confirmed that the moratorium on new payment services and money transmission provider licences - first unveiled on November 19 last year - will in effect in place for two full years.

It added: "The Bank has reviewed this position and advises that given the impact of the pandemic and ongoing adjustments in the sector, the moratorium will remain in place until the end of 2021. At that time, the Central Bank will undertake another review. The bank will continue to consider other regulatory applications affecting the scale or ownership of existing operations."

The moratorium's imposition drew a mixed reaction when it was announced. Harvey Morris, Omni Financial Services' chief executive, praised the regulator's decision as "an excellent move" that will enable existing Bahamas-based payments operators and money transmission businesses to develop their products/services in a sustainable market environment.

However, other industry sources, speaking on condition of anonymity, criticised the Central Bank's action as an attempt to "artificially control" the fledgling sector rather than encourage its innovation-led development. They argued that the regulator needed to step back and allow consumer-driven "market forces" to determine the best operators, and who succeeds or fails.

The Central Bank's action thwarted the hopes and business plans of two unnamed digital payments providers whose licence applications it confirmed had been submitted - but not approved - prior to the moratorium's imposition.

This left the Bahamian non-bank payments market with three licensed digital providers and five approved money transmission businesses, together with the latter's collective 23 agents. The suspension applies only to new licensees, meaning the likes of Cash N'Go, Sun Cash and Omni can still expand via new locations and/or by adding agents once the latter get the necessary approvals.

The Central Bank has never explained the underlying reasons for its decision, but it appears the rationale lies in fears that the market would become unsustainable and over-saturated if more licences were awarded, with too many players chasing too few customers and undermining its orderly development.

Meanwhile, the sector's existing players appear poised for further expansion. Herbert Cash, Kanoo's chief financial officer, told Tribune Business: “Digital payments, and the adoption of digital wallets, has increased over the last few months. This has been driven primarily by the users receiving social benefits from non-governmental organisations and the Government. COVID-19 is the main driver for all of this. Banks have even seen a greater use of their online banking services.”

Kanoo, which was launched in December 2019, said it had attracted 12,000 users of its digital wallet services by October this year. "We recognise that more persons are comfortable using the wallet services, and more merchants are using it to collect and process payments," Mr Cash added, with the launch of the Bahamian digital currency, the Sand Dollar, set to give a further boost.

He said: “With our line-up of improvements and product releases, 2021 is expected to be a year of tremendous growth for Kanoo and the industry. We see not only significant interest in The Bahamas but also throughout the English-speaking Caribbean.

"Kanoo’s digital gift card platform has been a tremendous benefit for many persons. This form of digital payment is being embraced by merchants and corporate entities wanting to do something special for their staff this Christmas. This is our way to encourage persons to shop locally and support our domestic businesses and the labour market by extension.”

Jeffrey Beckles, IslandPay's managing director, added: “We're working at IslandPay, in particular, in ensuring that we collaborate with stakeholders so that the educational component is very robust and strong, and people understand what it means to have a digital wallet and what it means to handle digital currency.I think the more people get comfortable with the idea, the more people will embrace it.

"I do see significant growth for 2021, because as I said, digital payments is the order of the day and I think 2021 is going to give us a tremendous opportunity. We've been preaching about businesses becoming more tech savvy and digital, encouraging digital integration and all of that. But remember that those businesses are only going to be as successful as the consumer base is educated.”

Sean Smith, SunCash's business development manager, added: “For next year, how are we planning to change people's lives is the government now is really and aggressively moving forward with the digital payments with the roll out of the Sand Dollar nationwide, which now allows us to be able to help a lot of people in 2021.

"The Government is going to be doing payroll in Sand Dollar, and they're going to start with certain government agencies where they will be paying you by Sand Dollar.”