Recently, the North American island country, Jamaica, has decided to adopt the use of central bank digital currency (CBDC) on e-commerce platforms. According to Jamaican Senator Aubyn Hill, this will allow users to make payments on e-commerce platforms. Also, he pushes for the use of the country’s CBDC, the JAM DEX on the “Digital Marketplace”.
In 2022, Jamaica launched its own CBDC, JAM DEX and the aim was to cut the costs of transactions while allowing the unbanked to provide financial services. At that time it was estimated that almost 17% of people were unbanked and authorities feared that the number could be higher than calculated. And the reason behind the less financial inclusion was higher transaction costs and citizens thought that banks made for the rich section only.
In an interview, Hill revealed that the country has various payment platforms like Lynk and JAM DEX. According to him, people are less inclined towards these platforms because there are insufficient merchants on them. Additionally, there’s no unified marketplace where all buyers can meet easily on a payment system. For those who are not aware, the only bank to have released a wallet so far is National Commercial Bank (NCB), and Lynk is the CBDC app they created.
The senator clarifies that the e-commerce platform will help small companies advertise their items. Also, by using e-commerce platforms these small businesses can eliminate the role of middleman. It specifically targets underprivileged businesses that are unable to handle debit and credit card payments, supporting the secondary CBDC goal of broader financial inclusion set forward by the central bank. The “Digital Marketplace” will be developed by a consortium of private sector actors with Lynk and central bank officials collectively. “The JAM-DEX has been targeted at the country’s informal workers to facilitate instant settlements”, says the senator.
In 2022, when Jamaica launched CBDC, it was assumed that 70% of its population will start using it by 2027. However, recent reports show the slow adoption of CBDCs by citizens due to accessibility and confusion. Also, Jamaica aims to replace 5% of dollars with CBDC. It will be interesting to witness whether the “Digital Marketplace” will help the country to achieve its desired goal or if the problem continues to increase.
