Will UPI change how we shop?

BitDepth#1500

Mark Lyndersay

"THE UNBANKED represents a large, untapped market," said Ian T Alleyne at the TTIGF forum discussing fintech on January 31.

"We were talking recently with the Central Bank (CBTT) about (the challenges with onboarding clients) and they reiterated that fact that there is now simplified due diligence which allows clients to sign up with one form of (photo) ID.

"That would be enough for a fintech company to provide citizens with access to financial resources, so fintechs must harmonise that into their own systems and bring the unbanked into the financial space."

Compounding the problem is the reality that if a citizen chooses not to acquire a national ID card, never travels outside the country, and doesn't drive a car, they may have no identification beyond their birth certificate.

Underlying any significant change to digital payments will be the implementation of a national e-ID system, long on the agenda of the government.

"If I have to go home and get a copy of my birth certificate or a copy of my passport, that creates friction for the end user," said John Outridge, CEO of the TT International Finance Centre (TTIFC).

"The point of the e-ID is that I have this number, this authenticator that says John Outridge is who he says he is. (That would reference) a database of documentation that I don't have to provide. Simplifying due diligence was a really important move by the Central Bank.

"For the Eastern Caribbean, when we did the DCash project, we had two versions of the wallets, we had one version for licensed financial institutions for their customers and we had a version specifically for people off the street who may not have a bank account," said Shiva Bissessar.

"That second wallet used simplified due diligence with fewer identity requirements with a corresponding reduction in the limits (in the spending values). That wallet had a higher uptake than the one issued by financial institutions. But it's for each territory to define what is the opportunity, what frictions and documentation are considered necessary."

This is a big push and the CBTT, in response to questions, states that a pilot project is to be conducted by mid-year with full implementation to follow by the end of 2025.

"Digital payments provide a faster, safer, and more efficient way to transact, and we believe adoption will only accelerate as more people experience the benefits," said Simon Fortune of Pesh in response to questions.

"However, widespread adoption also requires a cultural shift. Trinidad and Tobago remains a cash-based society, and for e-money to reach mass adoption, it must be as simple, fast, and universally trusted as cash.

"Real-time payments eliminate friction in everyday transactions, reduce delays, and unlock new possibilities for digital finance."

According to Outridge, when he joined the TTIFC three years ago, there wasn't much progress in fintech.

"The entire mandate of the TTIFC was shifted to focus on enabling fintech in TT. One, because it was seen as a big enabler of digital transformation and to facilitate trade."

It also calls into question exactly what the role of e-money issuers will be when a government-sanctioned fast payments system is in place.

Alleyne may be hopeful that it would lubricate onboarding of new clients to Paywise, but it also means that he will have to offer a unique selling proposition for his service.

For his part, Fortune noted, "We are optimistic about the potential of the UPI (Unified Payments Interface) project and believe that, if implemented successfully, it could be a transformative moment for Trinidad and Tobago."

The CBTT previously implemented the Automated Clearing House (ACH) system, now in private hands, and the Real Time Gross Settlement (RTGS) system, managed by the bank.

Asked about its plans for the UPI system, the CBTT responded that, "Consistent with our role as regulator, CBTT would license and regulate the payment system under established regulatory and supervisory practices."

The UPI project is also likely to delay any efforts at pushing forward with a CBTT digital currency, which Bissessar believes should end up being a conduit for wholesale currency exchange instead of a consumer-based retail exchange medium.

With the insular sabre-rattling happening in Washington, a regional effort to delink Caribbean central banks from the US dollar as a basis for exchange and a move to a regional digital currency exchange happening at the top level of each country's financial sector will increasingly begin to look like a good idea.

Mark Lyndersay is the editor of technewstt.com. An expanded version of this column can be found there