The cost to do cash and cheque transactions is extremely high in the Eastern Caribbean, according to the Governor of the Eastern Caribbean Central Bank (ECCB) Timothy Antoine, and he wants the region to cut back on its use of these two methods of financial transaction.
In a release of the ECCB Connects weekly YouTube videos, Antoine said doing business this way drives up the cost of goods and services.
“Invariably these high costs are passed on to the consumer. Many people do not recognise that, but that is what happens and it is also obvious to us that many businesses do not recognise the true and full cost of cash services,” he noted.
He said in order to determine the cost of doing business that way, one has to factor in the cost for insuring, securing, storing and transporting the cash/cheques.
The bank’s governor said using cash “has its convenience” and “will continue to play a very important role in our economy” in the foreseeable future, since the bank does not intend to eliminate the use of cash.
However, he reiterated that to conduct business under such a payment system is still too slow and expensive.
Currently, over 80 percent of transactions in the region are done via cash or cheque, and “many of us know only too well, the high cost associated with
certain banking services,” he said.
A lot of the cash transactions are done by the informal sector. Antoine indicated that “given the fact that the informal sector is so important in our region, means that the informal sector bears a disproportionate burden in respect of the cost of cash.”
However, he noted, it should be acknowledged that: “They, too, feel real constraints. For example, some of our businesses are required to pay as much as three-and-a-half percent on every credit card sale.”
“That exorbitant charge reduces and, in some instances, removes the incentives for small businesses to offer their customers electronic options such as credit cards and debit cards; and if they do, it limits the ability to offer customers discounts because of the cost that they pay to provide the card services,” he added.