A matter of trust? Why is the Caribbean still behind in conducting digital transactions online?
Without a doubt, the Caribbean still behind in conducting digital transactions online. We offer a few reasons why that is the case.
In its 2016 study on Internet security and trust, the Centre for International Governance Innovation, a non-partisan think-tank, found that “a significant percentage of Internet users do not trust the Internet enough to conduct financial transactions online” (Source: Caribbean News Now). That finding was the springboard for the views expressed by Ms Rhea Yaw Ching, Executive Director of the Covela Foundation, at the Caribbean Peering and Interconnection Forum (CarPIF), which was held in Sint Maarten last week.
The main thrust of her talk was the relationship between digital literacy and financial inclusion:
There is a direct correlation between digital literacy and financial inclusion…
Sixty-five percent of the Caribbean population is unbanked, meaning that they are predominantly cash-based. And a further 20 percent are underbanked, meaning that they under-utilise the financial services that do exist.
(Source: Caribbean News Now)
The above views and the data presented are not new. However, they do beg the question, what might at the root of it all? Below, we highlight three likely contributors.
A hand to mouth existence
The predominance of the unbanked and the underbanked in the Caribbean has been widely reported in various quarters, however what is frequently overlooked is that a considerable segment of our societies essentially live hand-to-mouth. What little income they receive is almost immediately committed to their daily needs: paying for food; rent; utilities; transportation, to name a few. More importantly, there is no little savings. Frequently, the money is not truly enough; so when it is finished, they go without.
Additionally, it is also important to highlight that there is s cost to banking. Generally, and across the region, attention is regularly drawn to the fact that bank charges are high. Recently, a Bill was tabled in the Jamaica Parliament to amend the country’s Banking Services Act to increase customer protection against high fees (Source: The Gleaner). Whilst this amendment seeks to lower bank charges, they cannot be eliminated altogether. Hence, it still could be a unjustifiable expense for those that are struggling to eke out living; and basic banking – not even online banking – cannot even be a consideration.
For those of us who have bank accounts, there can still be a question of trust, especially with respect to digital banking. Whilst we may be of the view that it is safer to have our money deposited in a bank, rather than under our mattresses, the security breaches that most of our banks have been experiencing might actually give us cause to pause.
Further, if your bank has called you in to replace your bank card and/or credit card due to concerns that your card(s) might have been compromised, invariably they do not share that the breach happened on their end, not yours. Such experiences can appear to justify the behaviour of those among us who although they have bank accounts still do most of their banking transactions in person: they operate primarily with cash, although they may have bank and/or credit cards with which to conduct digital transactions.
Still difficult to do business online
Finally, and in addition to the digital literacy, Ms Yaw Ching highlighted the existence of a large informal economy in virtually all Caribbean countries, which perpetuates the very limited use of digital financial services:
The informal economy is a key driver of the economics of most Caribbean nations. Unfortunately, the informal economy is still largely characterised by limited access to ICT services, limited access to formal financial services, and, critically, limited digital skills…
(Source: Caribbean News Now)
However, a crucial challenge in conducting business online is how difficult it still is across the Caribbean – in 2017 – to offer electronic payment options. As we, at ICT Pulse, have noted before, not only is it expensive to implement, with high bank charges, the application process can also be daunting and complicated.
For micro and small businesses in particular, it can be argued that the current environment, that is the difficulty in securing online merchant services in the region, continues to foster the informal, cash-based, economy. There is the potential to change behaviour and attitudes to digital services when options exist that encourage wide take-up and use. Hence, unless or until the ease with which Caribbean businesses can conduct electronic payments becomes a non-issue, we, as a region, will always be plagued with a wide digital divide between those who are prepared to conduct digital transactions online, and those who are unwilling or unable to do so.
Image credit: Sean MacEntee (flickr)