The Central Bank of The Bahamas has officially started consultations with banking institutions, credit unions as well as other payment services providers on a strategy to “eliminate all use of domestic cheques by the end of 2024.”
According to a release, wider public consultation is also “being initiated to ensure that the strategy delivers on outcomes that are efficient, financially inclusive and supportive of further development of the domestic financial system and economy.”
As mentioned in the announcement:
“Renewed focus on cheques follows discussions with the Ministry of Finance and Clearing Banks during 2020, to set five-year targets to achieve a significant reduction in the use of both cheques and cash in The Bahamas.”
The update further noted that in The Bahamas, electronic fund transfers and other non-cash transactions are “increasingly substituting for cheque payments.”
The announcement also mentioned it “reflects both payer preferences and deliberate decisions by recipients (individuals, business and the government) to discontinue acceptance of cheques.”
In addition, the fee structure for electronic settlements “has favored non-cheques, with the Bahamas Automated Clearing House (BACH) charging more for cheque settlements than for other fund transfers.”
The announcement further noted that the COVID-19 pandemic also “fueled increased demand for non-cash and contactless payments, setting the stage for faster change.”
In the meantime, mobile wallet payments are “poised for greater adoption, providing more financially inclusive and interoperable substitutes, enabled by the Central Bank’s digital currency, the Sand Dollar.”
As noted in the release:
“Digital payment alternatives have completely replaced cheques in many countries, and concurrently supported reduced cash transactions. Many other countries are in the process of completing this transition.”
The alternatives to cheques underscore “more secure, efficient and faster (even instant) means of making payments.” But such transformations “emphasize the importance of deliberate policy interventions and stakeholder engagement to embrace change,” the announcement added.
A Bahamian reduction and elimination strategy will “proactively address financial inclusion and promote legitimate access to alternatives, for both individuals and businesses.”
The update further noted that the elimination strategy “proposes to provide adequate public education around the use of digital alternatives, and consider positive and consistent pricing incentive structures across the financial sector.”
Also to be addressed are residual issues “around the legal clarity of settlements that are projected increasingly to be instant or faster in nature; around the finality of the process; and the recourse of payers and payees in the event of errors or fraud,” the update confirmed.
For more details on this announcement, check here.