Royal Bank of Canada is one of three Canadian banks with a presence in the Caribbean, and is deploying contactless card readers throughout the region to ride a wave of digital payment adoption.
The move to support contactless payments is a first step toward enabling mobile wallets. RBC has yet to issue a mobile wallet for its cardholders in the Caribbean, although mobile wallets are planned for RBC’s Going Digital initiative in the region. This initiative involves encouraging RBC customers in the Caribbean to use its ATMs and digital and mobile banking platforms, which have been expanded with new payments capabilities.
Individuals using some mobile wallets will be able to use their phones for mobile payments at RBC’s contactless-enabled POS devices. “However, mobile wallets aren’t as prevalent in the Caribbean as they are in other parts of the world, and individual banks which operate in the region haven’t yet launched mobile wallets,” said Rob Johnston, head of Caribbean banking and CEO, RBC Financial (Caribbean) Ltd.
“The mobile payments feature, for now, would most likely be used by visitors to the region from countries where their banks offer wallet technology," Johnston said. "As the region becomes more digitally enabled and more people take advantage of these technologies, mobile wallets and payment apps will likely become more commonplace, and payment acceptance will adapt accordingly.”
The other Canadian banks operating in the Caribbean are Scotiabank and CIBC, which owns CIBC FirstCaribbean. RBC said it has operations in 17 Caribbean countries including Trinidad and Tobago, the Bahamas, Barbados, Turks and Caicos, the Cayman Islands and Curaçao, plus 66 branches and over 1 million clients in the region. However, RBC sold its Jamaican subsidiary to Sagicor Group Jamaica Ltd. in 2014.
Since RBC’s contactless technology is still rolling out in some Caribbean markets, it’s too early to estimate the volume of contactless transactions in the region, Johnston said. But it does have a firm timeline for deployment.
“Just over two-thirds" — 68% — "of our Caribbean credit card client base will have been issued with contactless enabled chip cards by August 2018,” Johnston said. “We will be issuing the rest of our Caribbean credit cardholders and debit cardholders with contactless-enabled chip cards in 2019.”
With increased digitization, RBC is seeing greater numbers of Caribbean merchants take advantage of its POS capabilities. But certain parts of the Caribbean are still very much cash-dependent for some everyday purchases, particularly the smaller islands.
“With the introduction of new technologies like contactless payments, chip-and-PIN capabilities and RBC’s EZPay card acceptance system, we’re seeing card-based and digital transactions become much more common as compared to just a few years ago,” Johnston said. EZPay is an mPOS system that lets merchants accept card payments on their smartphones or tablets equipped with an EZPay device.
Mastercard and Visa are also actively promoting contactless payments in the region.
“In the Caribbean, contactless is still ramping up,” said Rodrigo de Paula, director of market development for the Caribbean at Mastercard. “The most advanced island in terms of contactless penetration is Bermuda, where 98% of merchants are ready to receive contactless transactions. In addition, there are a number of efforts around contactless underway in the Dominican Republic, but it’s still early days.”
Visa is working closely with key issuers, merchants and acquirers throughout the Caribbean to accelerate the adoption of contactless payments, which it describes as a secure alternative to cash.
“Contactless technology can help to facilitate the transition from cash to electronic payments in Latin America and the Caribbean,” said Ruben Salazar, senior vice president for products and innovation for Visa Latin America and the Caribbean.
In mid-2017, Visa issued an official mandate in Latin America and the Caribbean to its issuers that all newly-issued Visa credit and debit cards must be contactless-capable by Q4 2018.
According to “The State of Contactless Payments in Latin America,” a study by Americas Market Intelligence that was commissioned by Visa, contactless payments are still at an early stage in Latin America, where just a few issuers have launched contactless cards. The report notes that across Latin America cash accounts for 90% of retail payments and that contactless payments represent just 1% of total credit and debit card card-present payments.
"There remains a large opportunity ahead as contactless transactions in the Caribbean still account for under 1% of total face-to-face transactions," Salazar said. "The key markets behind this shift to contactless are Puerto Rico, Barbados, the Dominican Republic, Bahamas, the Cayman Islands and Trinidad & Tobago, according to VisaNet data for April 2017-April 2018.”