Budget 2019

Fiji Budget 2019: Going Cashless Helps Economy

Bank South Pacific Limited’s Fiji Country Head Haroon Ali explains why this transition is good for a country like Fiji
22 May 2019 18:27
Fiji Budget 2019: Going Cashless Helps Economy
Bank South Pacific Limited’s Fiji Country Head Haroon Ali .

The FijiFirst Government set the platform for people to ease into a cashless society.

They provided incentives and got banks on board to allow people to use their debit cards for almost every purchase.

So why is this transition so important?

It helps keep the money within the system. And, in the long run, it also helps bring down the interest rates on money banks lend to people.

Bank South Pacific Limited’s Fiji Country Head Haroon Ali explains why this transition is good for a country like Fiji

How is going cashless good for our economy?

As mentioned previously by the Reserve Bank Governor, there is more than $800m cash in circulation in the market. If we can get Consumers to use debit cards in lieu of cash and get say at least 50 per cent of this cash back into the banking system, these additional $400m can be diverted for further economic growth through the banks funding new development projects/activities. This has been proven in countries (e.g. Singapore and USA) where higher cards usage has resulted in the growth of their GDPs.

In addition, there is a cost of cash production and circulation. A cashless society will also assist in the reduction of these costs plus the cash handling costs for the merchants, right up to the delivery of cash to the Banks (transportation/Insurance/security).

Furthermore, plastic cards also protect consumers from any loss of cash that cannot be recovered while cards can be stopped and replaced. These are some of the benefits for the consumers that would ultimately help with increased economic activities.

What has BSP done to aid Fiji in going cashless?

BSP, in the last eight years, has invested a considerable sum of money to improve and upgrade it cards services. A total investment of $13.7 Million has been made in hardware and software to bring BSP’s EFTPoS services on par with the best in the world. In addition, approximately $1.5 Million is spent annually, in technology and personnel, by the Bank to maintain its EFTPOS service.  This commitment to service and expenditure will continue in the future.

Effective from 15th July 2019, BSP will waive its EFTPoS Merchant Service Fee for below $5 transactions and also lower the same fee to 1 per cent for above $5 transactions capped at $0.40 to encourage the use of debit cards below $40.00 worth of purchases for goods and services.

Furthermore BSP has over 2,000 EFTPoS Terminals, SMS Banking, Online Banking and a new BSP Fiji Mobile Banking app to enhance customer’s access to their own funds without the need to handle cash for almost all their financial transactions. These services expand to our rural and outer-island communities that can become largely cashless as well.

What is the global trend in developed nations going cashless?

We don’t have to go any further than our neighbours Australia and New Zealand. We all have noted that consumers in these countries hardly use cash for their everyday financial transactions. Consumers have opted for bank cards to take advantage of EFTPoS services as their preferred way to pay/receive for payment of goods and services in lieu of cash because now it is cheaper, faster, safer and more convenient. We have seen cards with “Touch/Tap & Go” feature where the card does not even leave the hands of the consumer when paying for their purchases. How good is that? I am happy to tell you that BSP is also excited to soon introduce Visa Debit Cards with “Touch & Go” function.

An independent study commissioned by Visa International examining the economic impact of increasing the use of digital payments in 100 major cities around the world has found that reducing the reliance on cash can result in the immediate and long term benefits to consumers, businesses and Governments. These gains can be derived from factors including hours in time savings conducting banking, retail and transit transactions, in addition to a reduction in cash related crimes for Consumers. For businesses, gains were derived from factors including hours in time savings, processing income and outgoing payments, increase sales revenues from extended online customer bases. For Governments, gains would be derived from increased tax revenues, increased economic growth, cost savings from administrative efficiencies and lower criminal justice costs due to reduced cash related crimes.

(Source – BusinessWire.com)

Which policies of this Government have helped the banking sector?

Government policies have created a conducive business environment with good economic growth that has helped the banks grow their credit portfolios with improved operating performance. The Government regulation on removing of EFTPOS fee since 01st January 2019 for the consumers will encourage wider usage of bank cards and thus reducing reliance on cash which will accrue benefits mentioned earlier.

What are your views on budgets delivered in the past three years?

The Budgets have underpinned the consistent economic growth we have seen over last 9 years.

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