Leveraging Cashless Opportunities for Efficient Team Payments

Everything is about to ‘change’ to ‘digital’

Human Resource (HR) Professionals must be busier than ever! Coming out of the COVID-19 Pandemic, there is a new Work from Home (WFH) dynamic, increased mental illness issues, record employment numbers and a ‘season of employee fraud’ like no other.  

Statistically, the local unemployment rate for April 2022 decreased to 6.0%, 3.0 percentage points lower than in the same quarter of 2021.. Caribbean Policy Research Institute (CaPRI) Executive Director Damien King predicts the unemployment rate will fall even further in the short term.

Payment Limitations

Cashless payment options have several benefits **

Through it all, the need for reliably and effectively pay contract, full time and part-time employees remains constant. The collective workforce comprises individual workers at various employment levels, each with unique compensation packages and payment modalities. Simply put, what is good for the goose may not be good for the gander.

At the highest scale, employees are likely to accept remuneration via bank transfer or stock options readily. Those at the lower scale are more likely to be paid by physical cheque, transfer to a trusted friend/family member, or cash.  

Though necessary as of this date, cash payments are impractical, risky and eventually unnecessary. Cash is costly. Handling and security fees associated with transporting cash from financial institutions to business places for further handling and packaging for disbursement can be prohibitive. Particularly for small and medium-sized enterprises (SMEs), not to mention the time needed to execute the process.

Additionally, the risk of crime looms large. Internal and external threats in the form of fraud and robbery, not to mention the risks associated with legal and tax compliance, add further complexities for both the employer and the employee.

Adoption Limitations 

HR professionals have tried to encourage unbanked and underbanked workers to receive compensation via bank transfer with varying degrees of success. The resistance is understandable.

Many persons outside the banking system find the barrier to entry high. All financial institutions, from commercial banks to credit unions and even money transfer and remittance agents, must adhere to Know Your Customer (KYC) regulations. Though these regulations serve a valid purpose, they pressure workers to present two forms of Government of Jamaica (GOJ) issued ID, proof of address, credible references, and proof of current employment to open an account.  

Many Jamaicans have inadequate documentation, cultural distrust of banks, little if any access to branches and fear of prohibitive bank fees supporting the preference for cash. For many, opening an account takes too much time and effort. And once opened, it costs too much in both time and money to maintain.  

For many, cash is still the only payment accepted at their preferred locations. Digital payments may be commonplace at formal merchants; however, many informal merchants can’t or won’t take digital payments leaving digitally paid workers at a disadvantage. Practically speaking, you can’t yet use a digital wallet to buy farm fresh plantain in Coronation Market.  

On the one hand, paying cash is hard for employers. On the other hand, getting bank transfers is hard for some employees. And here we are in the middle of the cusp of change.  

Cashless Solutions

While not everyone can access a bank account, most can access a smartphone. With a registered smartphone in hand, workers, and their employers, can leverage the digital economy to their advantage.  

As with everything, there are risks – notably the mobile network infrastructure, fraud and general tech acumen. But the opportunities are plentiful.  

Let’s start with convenience. Cashless transactions are faster, more secure and more convenient than traditional cash-based transactions. Going cashless reduces the cost of printing, storing, and transporting cash, which can be significant for governments, banks and businesses. It also reduces the risk of fraud and theft associated with cash handling.

Using digital wallets promotes financial inclusion and provides access to banking and financial services for people who are unbanked or underbanked. 

Businesses will appreciate that cashless transactions leave a digital trail, making tracking and monitoring financial transactions easier and reducing the risk of fraud and money laundering while improving tax compliance. Businesses can also benefit from the ease of accepting payments, reducing transaction costs, and making it easier for consumers to purchase goods and services. 

So revolutionary are the opportunities that the GOJ is actively supporting a cashless economy. With the introduction of Jamaica’s first fiat Central Bank Digital Currency (CBDC), the government incentivises consumers and businesses to conduct transactions in JAM-DEX currency rather than cash.

Citizen workers can access JAM-DEX through approved digital wallets (sometimes called mobile wallets) without needing a bank account. Sign-up is more straightforward, the accessibility is excellent, fees are non-existent (for now at least), and the value is maintained in tandem with the Jamaican dollar.

A smartphone with a camera, a TRN (Tax Registration Number) and a single photo ID are the typical requirements to register a mobile wallet.

Using an app (or, in some cases, a secure website), users can ‘cash in’ or ‘cash out’, make payments for goods and services, transfer funds to friends and relatives and receive salary payments.

Before you know it, you may be able to leave your physical wallet at home, go shopping and pay at the counter, send money to your sister and stop by ATM and withdraw cash with nothing more than your smartphone.  

Several local mobile wallet options include LASCO Pay, WiPay, and mycash by Paymaster. JN Pay is on target to be available any day now. Lynk is currently the only mobile wallet that supports JAM-DEX.  

In all cases, users should take steps to protect their digital wallets. The tried and true advice for online security applies - use a PIN or strong password, enable multi-factor authentication, frequent software updates and close monitoring of activities.  

Adoption Strategies

As mobile wallets grow in acceptance, HR professionals can contemplate the transition from cash and cheque payments to digital wallet transfers. Businesses would have the same flexibility and security of bank transfers, and workers would have convenience similar to cash. Digital wallets have the potential to save money, save time, reduce overall risk (there is always some risk) and improve accessibility.  

Mobile wallets can also expand to leverage other benefits like making bonus payments and managing loyalty rewards and gift certificates. Beyond the traditional business environment, individuals paying domestic and casual labourers can tap into the ease, convenience and relative safety of compensation to digital wallets.  

In reality, cashless doesn’t eliminate cash; it means less cash.  

Workers should still be able to access cash payments in tandem with cashless options until they are comfortable with the transition. Education, understanding, incentives and time are the hallmarks of a good transition policy.  

Take Away

Just as many of us don’t remember the conversion from shillings and pence to the Jamaican Dollar, the next generation will not remember what it was like to use paper currency. It is time to make that “change”.

Prepared for the Human Resource Management Association of Jamaica, (HRMAJ) Members Meeting on April 27, 2023

Members Meeting

** Some images AI generated