Cayman’s payment systems lag behind the rest of the world, and reform is needed to help businesses survive, according to Digital Cayman.
With the coronavirus crisis forcing a greater reliance on the online economy, the newly formed group, which advocates for tech solutions to Cayman’s problems, is focussing on digital payments.
While the island is looking to create a new tech sector to drive the economy, many businesses still use cash or cheques.
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Services like PayPal don’t exist in Cayman and the fees for taking online payments are prohibitively expensive, said Chris Wall, director of Digital Cayman.
He said the inability of small and medium shops to be able to accept online payments is a real issue for the local economy.
“We need to work out a way for government, CIMA (Cayman Islands Monetary Authority) and the local banks to significantly reduce the costs for the ordinary business owner who simply cannot afford the high fees currently associated with being able to accept payments online,” Wall said.
“The Cayman Islands is a major financial jurisdiction so we should be at the forefront and not at the back when it comes to tech, payments and shopping. In light of COVID-19, this has become more and more apparent.”
If Cayman faces a second or third lockdown or anther pandemic, he said, the ability to facilitate online shopping could be the difference between survival and failure for some businesses.
Concerns over its payment systems were highlighted at the Cayman Digital Economy Conference held over Zoom in June.
Cayman is very much behind other countries in this regard, with many businesses still using cheques, which can take five days to clear, according to Paul Byles, who chaired the conference.
“One of the positives that came out of this COVID experience is that most of us are far more receptive in terms of using technology because it was necessary to do so,” he said. “That means being able to receive payments online within a matter of minutes instead of relying on cheques being sent in the mail.”
Byles said the COVID experience has shown that Cayman can progress its digital economy much faster than it has previously been willing to do.
He said payments, whether by cheque or online, needed to be processed quicker and clear faster with fewer fees attached.
“When you carry out the research into what happens in other countries, you will see that cheques are clearing within a day and, in some cases, legislation is passed to ensure that this happens. We should ideally move away from cheques completely wherever possible.
“There is no good reason why banks cannot put a system in place where payments between banks are carried out within minutes, not a day as is currently the case with the domestic bank-to-bank transfers offered online”.
Digital Cayman wants to see a dialogue with local banks and government officials to get this done. The association is working on a white paper, which will be presented to the government to try to move the conversation forward.
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