Consumers slipped less during the lockdown
More cash was in circulation and fewer Barbadians were using their credit and debit cards last year, as the country experienced several closures due to the COVID-19 pandemic.
At the same time, the 2020 Financial Stability Report, which was released on Thursday, also showed government electronic payments on the rise as the Mia Mottley administration continued its efforts to eliminate paper-based transactions.
According to the report, after five years of steady growth, point-of-sale (POS) payments and automated teller machine (ATM) transactions contracted slightly in 2020.
“The value of point-of-sale and ATM transactions fell 2.3% and 12.5%, respectively. These declines were triggered by the nationwide shutdown and layoffs which dampened consumer demand, ”the report said.
Domestic credit card transactions fell 12.6 percent or $ 92.8 million last year. The report says the decline was recorded in the personal and business sectors, with individual consumers accounting for $ 84.4 million of the decline and business transactions $ 8.4 million.
Debit card transactions (POS and ATM transactions) totaled around $ 1.2 billion in 2020, while credit card transactions reached just over $ 600 million.
At the same time, the currency in circulation grew 7.4% in 2020 to reach around $ 900 million, or 10.6% of gross domestic product.
“This result was driven by the increase in cash holdings at financial institutions to meet liquidity needs and meet the higher demand for cash from customers during the pandemic,” he said.
The Financial Stability Report noted that the coronavirus pandemic has highlighted the importance of having safe and efficient electronic clearing and settlement systems.
He noted, “With the increased demand for contactless payments to reduce the likelihood of virus transmission, government, businesses and consumers have relied heavily on electronic payments to facilitate their operations and transactional needs. “
Therefore, the report notes, the Real-Time Gross Settlement System (RTGS), which processes large-value and urgent payments between the national banking system and the Central Bank and Barbados Automated Clearing House Services Inc. (BACHSI), which facilitates the clearing of checks, direct payments and daily interbank settlements have enabled efficient and robust transaction activity in the financial system.
For the past year, the volume and value of transactions processed through the RTGS system increased by 36.4% and 26.6% respectively.
“These gains were largely due to property tax transactions and other government payments that might otherwise have been facilitated by check or cash before COVID-19. As a result, the average value per RTGS transaction fell by 7.2%
The report notes that overall payments processed in the internal market for 2020 increased by 2.8% compared to 2019.
“This growth has been driven by electronic payments through the RTGS system, but direct payment through the BACHSI system has also increased. At the same time, with depressed economic activity, customer-centric electronic transactions, namely debit card, point-of-sale and credit card transactions, as well as check payments have declined over the course of the decade. ‘year. The value of ATM transactions has contracted, but the flow of currency has been boosted by financial institutions that hold more cash, ”the report explains.
The value of transactions processed through the BACHSI system fell 10.5% for 2020. At the same time, check payments fell $ 4 billion as the government continued its multi-year efforts to reduce paper-based transactions. .
“Therefore, the National Insurance Scheme has increased direct payments to facilitate access to benefits. As a result, the value of direct payments increased by $ 2.1 billion to represent 33.9% of total payments through the BACHSI system in 2020, compared to 19.2% a year earlier, ”he said. declared.