Adrian Loveridge Column – Acceptance of Electronic Payment a Must

One of the world’s largest credit and debit card issuers, the technology giant, Mastercard, has recently launched what it calls the Smart Islands program in the region.

While over the last ten years, tourism growth has shown significant and steady growth with small and medium size enterprises (SME’s) throughout the area playing a critical role in the economic ecosystem according to an Engagement Bureau press release, ‘only a tiny portion of companies in the region accept electronic payments.

Today, out of the total of 1.4 million merchants in the region, only 10 per cent of those are accepting electronic payments’. When you consider our principal tourism markets and the overwhelming use of cards to settle almost every type of purchase transaction, this is a staggeringly low percentage, especially when you take into account, often there is a foreign currency exchange element taking place.

Independent research clearly shows that tourists’ are far more likely to spend money where making payments are convenient and secure.

On launching the initiative, Jimena Elia, Director of Market Development for Mastercard Caribbean stated, ‘innovation is in Mastercards’s DNA’ and ‘we are excited to reveal this multi-layered technology that can help expand the tourism industry’s earning potential and build the Caribbean’s resilience to natural disasters by developing smarter islands built on cashless societies’.

To me, at least, it is a no-brainer for our Government to partner with commercially driven organisations like this, to better track tourism spending and allow them to collect taxes, where they are due, rather than continuing to haemorrhage valuable foreign exchange, which frequently evaporates unrecorded offshore, where little or no national benefit is extracted.

Or perhaps the article explains it in better words – ‘The data and tourism insights that the Mastercard Small Islands Program provides can help Governments and Destination Marketing Organisations (DMO’s) define a country’s ideal tourist, enabling more efficient marketing investments with higher ROI (return on investment)’.

Years ago, sadly without success, I lobbied for a Barbados branded credit and debit card, where all purchases paid for by our visitors, both on-island and the means to get here (airfares), earned points or miles which could be re-deemed on their next visit. Just by using this particular card as payment, the holder would also qualify for additional discounts or benefits, like the island-wide 30 plus lunch

re-DISCOVER restaurants offering 10 per cent reduction or a fixed price dinner at another 20 eating options. Of course, it could be similarly used at all types of accommodation, car rental, activities, attractions, shopping, dining and all other possibilities, increasing the likelihood of visitors returning and building destination loyalty.

With an increasing myriad of choices, brand loyalty has become an increasingly critical part in the marketing of products and services to retain existing clients.

After all, enticing a returning client is less expense than finding a new one.

138 comments

  • peterlawrencethompson

    @Hal Austin

    I agree with that snippet of wisdom. It is sometimes attributed to Napoleon who is quoted as saying (in translation) “Never ascribe to malice that which is adequately explained by incompetence.”

    Like

  • peterlawrencethompson

    @William Skinner

    I agree with you characterization of the duoploly, but the rot is much more widespread than simply political parties. The rot predates all of our contemporary politics by centuries and is firmly rooted in the Plantation culture which permeates our society.

    Like

  • Memory says MC paired with Fidelity in the Bahamas. Who are the financial partners in Bermuda and Jamaica?

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  • @Peter

    Three of the five banks in Barbados are N American owned and the other two Trinidad. Also MaserCard must have a relationship with these entities at a head office level. Struggling to understand your point about local banks. Surely MasterCard can make a persuasive argument at the parent office level?

    Like

  • @ PLT
    @ William

    We have had constitutional independence since 1966. When are we constantly blaming others for our failure. Our brightest and best have failed us. Look at the present president, who is lost like a wild hare trapped in oncoming lights.
    All highly qualified (paper qualifications), but most of them are lost when it comes to managing the nation. They have let ordinary people down. Put the blame where it rightly belongs.
    Barbados is a failed state.

    Liked by 1 person

  • @ David

    What are the “local” banks. Name one.

    @ Hal
    The Duopoly has no philosophy and no ideology. That is the major problem. You get two terms and a pension for life. That’s all it cares about.

    Like

  • de pedantic Dribbler

    David make that two of us… I am totally befuddled by@PLT’s remarks…

    Folks what am I missing here …

    I lasted attended a sales tech-banking conference (I was not a banker) over 15 years ago and then (and for and years prior) MC (and Visa) were completely linked and doing business in Bdos, Bahamas, Cayman, TnT, Jam and ALL other islands.

    I have no awareness of this new marketing program by MC but as I said earlier what can it be in this comprehensively crowded financial tech payment market other than A NEW MARKETING program.

    Folks come alive and wake up if u were slumbering somehow.

    The regional card market is NOT nascent. It is NOT new!

    FCIB and before that Barclays, CIBC, Royal and NCBJ, JNB (Jam) GNB, RBC TnT etc etc ALL had expansive card programs (mag readers).

    Now, of course we are at the stage where chip card proliferate … Do u guys know the angst to get THAT accepted locally and regionally.

    So why are we crowing about another program and lambasting banks as tech bandits when the MC and Visa logo were INITIATED by banks and are basically owned (governed) by the international banks of which the locals were mere off-shoots.

    So @PLT do explain please your riposte:

    “The Mastercard Bank-in-the-Box initiative for small entrepreneurs and vendors has been running in the Bahamas and Bermuda for quite a while and it was rolled out in Jamaica a year ago….But in order for Mastercard to launch it in Barbados they need a local banking partner. [Eh!] …
    However the local banks do everything they can to inhibit and sabotage the growth of financial technologies that benefit entrepreneurial.”

    [Oh…doesn’t use of a card expand their business and money making via fees (usage, overdraft, late, non payment) customers spending more readily and incurring more charges !]

    What am I missing here that you shrewd folks are noticing …please clarify.

    For the record…as long as over 20 years ago small merchants in Bim were able to get a card reader and ongoing maintenance service in the most out-of- way spots.

    At one point BEFORE the ubiquitous wifi there was also a (expensive admittedly) portable card read/acceptance terminal.

    So again what’s all this hollobooloo…BECAUSE Samsung and Apple are ready to take the MC and Visa lunch!

    To put that last comment in perspective. Today there was a news blurb about BlackBerry production coming to an end … What’s the connection : just about 10 -15 years BB OWNED the secure bus cell phone market. Today they are on the dung heap…thrown there by Samsung and Apple!

    MC and Visa can’t be similarly crushed by these phone manufacturers and payment apps now can they!

    I gone.

    Like

  • peterlawrencethompson

    @de pedantic Dribbler & @David

    By local banks I mean those consumer banks licenced to operate locally. As you note there are five of them. You might think that they would compete with each other for your business, but that is not the case. The fees the Canadian owned banks charge here are much higher than they could get away with in Canada.

    Yes dpD, you would think that they would promote “use of a card expand their business and money making via fees,” but local banks make it extremely difficult for small entrepreneurial organizations to adopt these technologies by refusing to grant them access unless the business guarantees outrageous minimum transaction volumes and maintains extortionate minimum floats in their business accounts. Then in respect to online ecommerce transactions they are a decade behind current technology in upgrading their systems to APIs which make ecommerce efficient so they simply discourage its use.

    The bureaucratic requirements imposed on local entrepreneurs are three or four times as large as those imposed on similar organizations in Canada or the USA. It is not government regulation; the north American banks have the same KYC (Know Your Customer) requirements. If you compare the bureaucratic nonsense imposed by Scotiabank in Barbados to that imposed by Scotiabank in Toronto you will have some insight into why the Barbados based business is not competitive with the Toronto counterpart.

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  • peterlawrencethompson

    What we need in Barbados is access to a service like Square https://squareup.com/us/en/hardware/reader which allows any mobile phone to be a credit/debit card reader. Then every coconut vendor on the roadside, every stall in Cheapside, even every Rasta peddling spliffs to tourists on the beach should have one.

    Like

  • @Peter

    Agree with a lot of what you wrote. Interview people in the know they mention two indicators for consideration if you want to compare local market with N America or even Trinidad – risk and scale.

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  • peterlawrencethompson

    Square mobile phone card readers have been available in the real world for a 10 years, but Barbados is still struggling to implement technology that is 20 years old.

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  • peterlawrencethompson

    @David

    Scale is a non issue. If we are operating an ecommerce business we have access to all the same markets as our competitors in California or anywhere else in the world.

    Risk is a pathetic excuse for not innovating risk management strategies. A ship minimises risk by never leaving port, but that makes it a pretty useless ship. In Barbados we seem to accept a pretty useless economy because we don’t want it to leave port.

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  • @PLT: “Square mobile phone card readers have been available in the real world for a 10 years, but Barbados is still struggling to implement technology that is 20 years old.

    A sincere question: why isn’t Square tech used here in Barbados? Is it the requirement for a Merchant Account? Can the indigenous Credit Unions not off this?

    Is this, perhaps, something Bitt could help facilitate? They’re already “sandboxed”.

    I have absolutely no knowledge in this space, beyond knowing that technology is not the issue.

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  • @Chris

    If you check square website it seems to be a US based service.

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  • @David… OK, I should have written “Square like tech”.

    This is Commercial Off The Shelf (COTS).

    My point is the technology is not the hurdle. Thus the question becomes, what is? And how does one solve that problem.

    Like

  • de pedantic Dribbler

    @PLT, fair enough I’ll accept your clarification re burdens demanded/imposed by local banks.

    Your mention of ‘Square’ reinforces my point that this MC emphasis is about marketing and shoring up/saving being eaten alive ..

    You are now in the space locally so you are aware that you can add PayPal, Applepay or WhatsMyLatestChineseName Pay to the mix… thus to repeat small local vendors can and will get (more) epay trans in place sooner rather than later.

    One other point I must perceive that you know there are some VERY savvy regional players in this e-commerce space… This issue I suspect is simply about wanting to huff or dominate the market … so yes folks like Square will be kept out as long as they can be.

    Let’s recall that the simple loyalty app called Magna which was started eons ago is now in fact a powerful one-to-one legacy dbase of customer needs and purchase patterns… That too was ecard based and is surely now much ‘smarter’.

    I say that to recap the point: there are regionals who can offer smart phone based e-commerce apps like any major international player…

    David’s point of scale is not a non-issue really…moreso one that causes delay as folks want to grab as much of this regional market or are just not too interested .

    Things out there are much more impressive ( local regional players that is) than you guys give them credit for.

    Lata.

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  • @Dee Word

    Wasn’t Magna huffed by Massy?

    Like

  • @Dee Word

    Did not understand Peter’s point about scale being a non issue. Barbados cannot in its wildest dreams churn the volume of transactions to compare with USA, Canada and other large markets. What Caricom should be orchestrating is a regional solution.

    Liked by 1 person

  • de pedantic Dribbler

    I really don’t know as I haven’t followed it in recent years but in sum I would think they would have been foolish not to.

    As you know it was a BS&T initiated program that was contracted (created by) another local company.

    It gradually expanded to include a host of non BS&T… As far as I recall it then expanded outside Bim and got as far as into South America…

    Sooo when Massy took over BS&T they with their bigger reach would have seen that as a jewel, I presume.

    I further presume they polished that gem and are making lots of money mining it’s data set and expanding its benefits.

    Like

  • fortyacresandamule

    I have always wondered why FLOW or Digicel didn’t try to copy the MPESA mobile money platform like what Safaricom did in East africa. Now they are expanding the platform to provide direct lending to subscribers. This leapfrogging has done wonders for Kenya’s economy.

    Wipay, coming out of Trinidad, is on to something in the e-commerce space. They plan to issue a token ipo on the jamaica stock exchange this year.

    @David. Carilend, got a new partner in VMIL out of Jamaica. They purchased 30% equity of the company ln 2019.

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  • Thanks fortyacreas

    Are you comfortable with then Carilend business/operating model?

    Like

  • @PLT: “In addition there will be a card reader maintenance fee and an issuer annual membership. The per transaction fee is likely to be about 4.5%.

    For some businesses, 4.5% is likely to be about 50% of the profits. Just for the ability to accept payment; perhaps not accepting anything but cash is a smart business decision.

    Like

  • peterlawrencethompson

    @dpD
    You are, of course, completely correct that Mastercard is simply rolling out a lame marketing gimmick, but we are so starved for value in financial technology that a lame marketing gimmick is better than nothing.

    Mastercard and Visa are indeed legacy technologies that may well be swept away by WeChat, Alipay, etc. Bitt was supposed to take up that mobile payments space regionally but it seems to me to be dead on the vine. Furthermore, it is bad strategy to grow a regional solution in our market because we have an economy where tourists have a greater spending power than locals, so it’s stupid to grow a financial ecosystem that shuts out tourist spending because they don’t have the app.

    Like

  • The creator was Prism…which was sold to Digicel.

    Like

  • peterlawrencethompson

    @Chris Halsall
    “For some businesses, 4.5% is likely to be about 50% of the profits.”
    +++++++++++++++=

    That’s really easy to deal with. Increase prices by 5% across the board then offer a 5% discount for paying in cash. Everybody’s happy!

    Like

  • @40acres
    now to tie the loose ends together….co-founders (2 of 4) at Carilend, B & I Innes, the latter of ICBL fame, the former a director who stepped down in Dec 2019…do you think the VMIL share was the Innes share?

    Like

  • peterlawrencethompson

    @David
    “Did not understand Peter’s point about scale being a non issue.”
    +++++++++++++++

    Let me illustrate with a fictitious company: Botsy Bikinis Ltd. The design and branding are done in Barbados and the brand is built regionally based on our sun, sand, sea & sex Caribbean image currently marketed to the millions of regional tourists. The manufacturing is done on automated machines in Haiti that talk directly to the designers computers in Barbados. Haitian manufacture gets them duty free access to American, Canadian and EU markets (the UK is now insignificant since Brexit).

    With proper ecommerce infrastructure Botsy Bikinis Ltd. competes on a level playing field with any swimwear company in the world. The tiny size of our local market is utterly irrelevant.

    Like

  • @PLT: “Increase prices by 5% across the board then offer a 5% discount for paying in cash. Everybody’s happy!

    Read the merchant agreement(s) carefully. Such discounts are expressly disallowed. And “secret shoppers” are often used to catch businesses who offer this kind of thing.

    Like

  • @ PLT
    The real damage done to the country’s economy will never be told. We sat idly by believing that the world will wait on us.
    We developed a so called boom
    economy solely on catering to rich expatriates real estate deals. And some sun tan people on the beach.
    Now the ……. has hit the fan, we are pretending that we are back. Back from where.
    On this very BU I read that we had so brilliantly negotiated an IMF loan that we can market it to other countries. Such utter nonsense is unique. Some people would read such crap and opt for suicide.
    That is our mindset. Any serious analysis of the economy free from
    intellectual opportunism and blind party loyalty will prove that this economy has not been properly managed for at least thirty years.
    It’s like a leaking roof ; as soon as you stop a hole another appears.
    How can a country be twenty years behind in technology and expect to compete effectively on the global market. The fault must be the Duopoly.
    We need some political guts to call a spade a spade. There are no local banks in our country. The banks only operate locally. We don’t have a single national or local bank. But that’s how we argue. Facts don’t matter. Just sound pretty.
    I guess that all the cars on the road were made locally because we can buy them at a local dealership!

    Like

  • peterlawrencethompson

    William SkinnerFebruary 4, 2020 6:19 PM
    “… this economy has not been properly managed for at least thirty years.”
    ++++++++++++++++
    Actually, this economy has not been properly managed since 1627…

    Like

  • Understand your point in theory.

    Check this video where we would have to get it right. The hard bit.

    Like

  • Mottley like dont even care much any more
    No more rubbing shoulders
    Seems like most of her time is spent out of the country enjoying photo ops and receiving some kind of award like the one she got from Guyana
    Meanwhile the people are crying out about the economic pain
    The gov of the Central Bank making distractions and some businesses filing for bankruptcy putting more people on the bread line
    Oh and dont forget her brilliant idea of letting the Chinese on to our shores while the Corona virus raises its ugly head leaving countries trembling in fear
    What a ting doah

    Like

  • fortyacresandamule

    @David. Re-Carilend. At first, I thought the model was quite risky. But I am slowly warming up to its potential. Victoria Mutual Investment Ltd also lends a certain level of credibility.

    @Northernobserver. Your observation is a reasonable one. It could be that is the case.

    Like

  • de pedantic Dribbler

    @ Northern, you know ur details well!

    I couldn’t remember the name… scary thing this ‘ole’ age bother.

    So those guys cashed out handsomely I presume … Whatever became of that crew?

    And to ur point of – or rather your veiled point of -‘interesting board bedfellows’… As I recall one of the principals of PRISM was a senior exec at Caricard back in the long ago days of Bajan e-commerce innovations … the companies were somewhat joined at the hip although the ‘non-traveller’ 😎 would not have known!

    Please let some more knowledge flow…

    Good stuff above.

    Oh…excellent point @Halsall re those merchant agreements … those things almost asked for your first born !

    Au revoir.

    Like

  • fortyacresandamule

    @Northerobserver. Butterfield Bank is the one partnering with Mastercard in Bermuda. For Jamaica it didn’t say. But I would guess NCB is the likely partner.

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  • fortyacresandamule

    I think it’s gonna take while before we see mass adoption from merchants and customers alike of the various payment platforms and digital currencies. Merchants are sensitive of exorbitant fees while customers are more concerned with security and trust.

    The region already has a plethora of mobile money products, but the take up rate is slow. It has been suggested that in order to speed up the process, government should start adopting these products and services into its own service delivery functions. Example, Wipay in trinidad can be used to pay court fines. And in Jamaica the government cash transfer programme is done using NCB bank mobile money platform.

    Like

  • Many things the government can do, pay car park fees is another but you know the cry that will come back.

    Like

  • fortyacresandamule

    @David. So true.

    Like

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