Consumer payments have shifted decisively towards digital options since 2019.
As it prepares to launch the national instant payments system (IPS) BiMPay at the end of March, the Central Bank of Barbados has published a Digital Payments Index (DPI) detailing the country’s digital payment evolution.
The monetary authority did so while making it clear that “even with rapid digital uptake, cash continues to play a trusted role in smaller transactions and for persons who prefer traditional methods”.
In an analysis titled The Digital Payment Evolution In Barbados, the Central Bank said that “Barbados’ payment habits continue to migrate from cash and cheques to faster electronic methods”.
“The Central Bank’s Digital Payments Index signals broad adoption of digital options. Cheque share in automated clearing house transactions fell by more than half over the last decade, while direct electronic transfers expanded by more than 700 per cent,” it reported.
“The point-of-sale share of debit transactions increased by 27 per cent between 2013 and 2021, and the ATM share declined by 17 per cent. Currency in circulation outside deposit-taking institutions fell in real terms by about 41 per cent since 2013. Together these shifts confirm a structural move toward electronic payments.”
The Central Bank said that its DPI “provides a concise gauge of modernisation”, combining six inflation-adjusted per-capita payment indicators.
These were “point-of-sale transactions, direct automated clearing house (ACH) transfers, and credit card use signal greater digital uptake, while cheque volumes, ATM withdrawals, and currency in circulation serve as cash-based counter signals”.
Structural change
“The series are standardised and averaged into a single summary indicator that tracks the economy’s shift from cash reliance to digital adoption,” the bank explained.
Giving some details on what it called “a decade of structural change”, the Central Bank shared that “electronic payments displaced cash and paper instruments from 2013 to 2024, lifting the DPI from -0.86 to +1.03, a gain of 1.89 standard deviations, as consumers and firms shifted to electronic channels”.
“The index turned positive in 2019, the first-year electronic payments surpassed traditional methods. Pandemic restrictions accelerated adoption, and the pattern continued after restrictions ended, confirming a structural change in how Barbadians pay,” it said.
In tracing this transition, the analysis pointed to an ongoing structural shift in payment behaviour in the following three areas: paper instruments continue to decline; card payments gain ground; and cash use shrinks.
“Together, these changes confirm a broad rebalancing of payment activity, from physical instruments toward electronic options, in line with trends across both advanced and emerging
economies,” it said.
With BiMPay scheduled to go live on March 31, the Central Bank said instant payments, also called fast payments, “would deliver instant payments at any hour, moving funds within seconds between banks and licensed providers”.
“The design promotes inclusion, since individuals, businesses, and government agencies can access the system, and persons without a traditional bank account can enter through participating institutions,” it noted.
The six commercial banks, three largest credit unions, Barbados Stock Exchange, and the Accountant General’s Office are mandated to participate in BiMPay from the start.
While the Central Bank report promoted the enhanced efficiency, reduced costs, improved transparency, expanded financial inclusion, and increased competition and innovation from instant payments, the analysis said that “cash still matters”. “Even with rapid digital uptake, cash continues to play a trusted role in smaller transactions and for persons who prefer traditional methods. Policy therefore supports choice while encouraging safe and efficient digital options,” it said. The Central Bank also said that the next steps of the digital payments evolution would focus on “trust, security, and adoption”. It elaborated, stating: “Sustained progress depends on strong public trust, robust cybersecurity, and wider merchant acceptance so that the benefits reach every user. “With BiMPay scheduled to come onstream in 2026, Barbados joins peers that already offer real time instant payments, including Brazil, India, and the United Kingdom, advancing national goals of efficiency, inclusion, and financial stability.”
This year, the Bank For International Settlements, which is owned by central banks, published the report Fast Payments And Financial Inclusion In Latin America And The Caribbean.
The study said that most countries in the region were fast payment systems and found that these services “go hand-in-hand with greater access to loans and savings in the financial system”.
However, the publication said that despite the increasing adoption of digital and fast payments in the region, there were some challenges which related to cybersecurity, fraud and data privacy risks, interoperability, end user and participant fees and universal access to fast payments.
“To address these challenges, central banks and public sector authorities can learn from the experience of their peer countries. Indeed, the experiences of Latin America and the Caribbean countries hold lessons not only for the region, but for other countries around the world,” the report advised. (SC)
