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BitDepth#1475

Mark Lyndersay

LAST MONTH the TT International Finance Centre (TTIFC) issued a summary of the results of its survey of financial inclusion in this country

The Digitalisation of Payments and Inclusion (DPI) Survey, which the TTIFC will use to design its national financial inclusion strategy, found, to nobody's surprise, that despite efforts to transition TT society to a cashless society, we want to hold on to our dollars.

What is money? It is any medium of exchange that is centralised, generally accepted, recognised by all parties and acts to facilitate transactions of goods and services. It is value codified.

Its value as legal tender for that value can vary widely. The TT dollar is essentially useless outside this country. Even the US dollar, while widely accepted as a representation of value, will sometimes fall into national sinkholes around the world where it has no value at all.

So the value of a financial instrument is what we say it is. Collectively, we are saying that cash is better than credit cards, debit cards and online transfers.

We are also saying, to an alarming degree, "fiyah bun banks."

The percentage of citizens who have a bank account has dropped from 81 per cent in 2017 to 75 per cent in 2023.

Only 52 per cent of the more than 2,000 survey respondents preferred to save their money in a bank. Eighty-two per cent preferred to save their money at home.

In the conclusion of the report was the following, "A concerning 41 per cent of the financially excluded believe they do not possess adequate funds to register an account.

"This sentiment is pervasive across all demographic groups, underscoring that costs associated with maintaining these accounts are disproportionate to the amounts that such consumers may save or hold in their accounts. This is a significant disincentive to opening, maintaining, and using an account.

"The preference for cash, perceived as 'free' by users, further accentuates this point."

That cost is borne by the State as part of its duty to manage the economy.

If you go shopping with a $50 bill, at the end of your spree you will have exchanged the cash for $50 worth of goods or services and the merchants you patronised will have each received their portion.

If you pay with a debit card at a point of sale terminal, there is a fee, which can range between free and $4, depending on who issued the terminal. Does anyone check that? No, because you can't choose to use another terminal to pay. Some banks also charge a fee on declined transactions (the Central Bank's record of electronic payments fees is here: https://cstu.io/306714).

Credit cards are even more costly. Micro merchants and small businesses (MSMEs) almost universally don't want to accept credit cards as a payment instrument because each transaction costs them three to four per cent of the payment.

These concerns have led to debit card adoption dramatically outpacing