Major reform of the way Barbadians make payments is coming, Governor of the Central Bank Cleviston Haynes has declared, in a bid to include more individuals and non-traditional payment methods.
In addition to legislation, the electronic financial transaction system is also set to be changed as a new law makes its way through Parliament, he said.
Addressing the monthly meeting of the Barbados Association of Insurance and Financial Advisors (BARAIFA), which was held virtually on Friday, the governor said payment system reform was important for the country’s overall economic development.
Haynes said advancements in digital technology and computer networks, internet-based businesses and e-commerce platforms including peer-to-peer platforms, were “influencing the nature and scope for financial intermediation and the payments and settlement ecosystem”.
Declaring that everyone involved in the payment system should be protected, he said this was the main reason behind the National Payment System Bill, which was tabled in Parliament earlier this month.
Haynes said the bill will promote a “safe, efficient, resilient and competitive payment system that manages risk, promotes financial stability and safeguards the interest of consumers”.
The Central Bank will be responsible for supervising the system but a would-be financial services tribunal will adjudicate unresolved consumer complaints, the governor told the meeting.
Haynes disclosed: “Apart from the new legislation, the payment system itself is undergoing change. Enhancements to the automated clearing house (ACH) will allow for real-time settlement of direct transfers, access is being made for non-traditional participants, emphasizing the need for interoperability so that payments instruments can be used seamlessly.”
According to him, credit unions were originally to have been included in payment systems under changes to the ACH, an electronic system that facilitates transactions including direct deposits, payroll and other payment services.
Haynes declared that it is “critical that customers have a choice in payment instruments and providers so as to ensure that transactions costs are contained”.
The Governor added: “The Central Bank firmly believes that pricing must not act as a disincentive to the use of new modalities for the execution of financial services. And that consumers must have a choice of alternative products to ensure the economy remains competitive.”
He promised that as new legislation was put in place and increased competition is promoted in the payment system, the Central Bank would educate consumers and financial institutions of their rights and obligations.
Haynes also used the opportunity to call on the financial advisors to work closely with the Central Bank and other stakeholders to educate the population.
Indicating that there is greater demand for, and use of, alternative forms of payments, Haynes said: “Financial service firms are adopting technological innovations, which have the potential to encourage financial inclusion, effectively increasing the number of locations at which your savings can be conveniently accessed and often without the need for an in-person presence.”
The Central Bank Governor said what was clear was that e-commerce was not a temporary measure or stop-gap until things return to normal, but it was now “the path to doing business in the future”.
“It is, therefore, necessary for us to ensure there is a robust framework with effective and secure operation of the national payment system, capable of the smooth execution of both domestic and cross-border transactions,” said Haynes, who pointed out that without an improved payment system for the 21st century and beyond, economic activity could be impaired.
“In the current environment care has to be taken that operational disruptions do not materialize which can cause the unavailability or limited availability of critical payment systems, and which could further disrupt our financial stability,” he said. (MM)