Local debit card system’critical’
A few million dollars should not be an obstacle to reaping the commercial and social benefits of implementing a local debit card system, unencumbered by fees from Visa or Mastercard.
Calling the move to such system’critical’, prominent businessman and former president of the Bahamas Chamber of Commerce Dionisio D’Aguilar toldGuardian Businesson Tuesday the appropriate government branch needs to’decree’such a move on pain of increased taxes to fund it.
“I don’t see why no one gets it… cost is not an issue here,”D’Aguilar said.”This is so good for commerce… If it costs one or two million dollars, so what?The banking system in this country makes an absolute fortune, even in the worst of times.”
From the Clearing Banks Association’s perspective, the question is not whether or not debit cards are the way of the future, but how to manage the capital and ongoing maintenance costs that such a system would cost.
“That really is the future,”Barry Malcom, the association’s chairman said about the use of debit cards.”It’s much more efficient, much safer, and I can see every dime I spend once I do it on a debit card… It’s a great product and a great system to have.”
Currently several banks offer debit card services, but they utilize Visa or Mastercard to process the payments through an international”switch”. The result is that merchants typically have to pay a two to three percent fee with each swipe, which acts as a disincentive, according to D’Aguilar. He said that businesses that don’t already accept credit cards really have no incentive to use debit cards.
A solution, according to Malcolm, is for the implementation of a local’switch’, allowing for lower processing fees per transaction and hence a more appealing product for the local marketplace. But despite D’Aguilar’s opinion that cost should not be an issue, Malcom said that deciding how banks would handle the capital and ongoing maintenance costs would have to be addressed.
Malcolm said that although everything was very preliminary, the association was looking at the issue of implementing a local switch, though no decisions were made yet.
“The Clearing Banks Association is exploring ways to advance the use of a debit card system in the country,”Malcolm said. He added that the association was looking at how to get the cost lower to advance the use of the cards in the local market.
Among the benefits of broad debit card usage, D’Aguilar said the costs associated with dealing with cash are high, and”if you can eliminate all that with a swipe and a pin the economic benefits are substantial.”In addition to the cost reduction, he said it would act as a deterrent to crime as well.
“If a robber comes into your business he comes in looking for one thing, which is what?Cash.”D’Aguilar said.”If you were to think of one enormous crime fighting tactic, if you were to drive everybody to use debit(cards)and pin(numbers), and reduce the amount of cash in circulation it would be a substantial crime fighting tactic.”
D’Aguilar also said that merchants would increase their access to the local market through internet commerce, because many Bahamians do not have credit cards, or their credit limits have been exceeded.
“The banking system in this country makes an absolute fortune. Even in the worst of times. Commonwealth Bank just declared profits of 50 million bucks,”said D’Aguilar, adding that he did not buy the notion that commercial banks could not afford the implementation.
“I don’t understand why[our politicians]are so scared of these banks. They don’t vote and they’re not going anywhere,”said D’Aguilar.”If you tell them, do this or else I’m going to double your bank licence fee, what do you think they’re going to do?”