Overview of Payment Systems in Barbados

Payments processed in the domestic market contracted during 2018 to represent 485 percent of GDP, compared to 593 percent in the previous year. This decline was driven by a fall-off in electronic payments as a direct result of depressed trading in domestic Government securities following the suspension of public sector external debt payments and the subsequent “cease trading” order on domestic debt. Outside of this policy-driven shift electronic payments dominated, followed by cheque-based payments, which declined over the year. On the other hand, the use of cash persisted as evident by the increased value of cash removed from automated teller machines (ATMs) and the increase in currency-in-circulation.

Transactional platforms, namely the Caribbean Integrated Financial Services Incorporated (CARIFS), the Barbados Automated Clearing House Services Incorporated (BACHSI) and the Central Bank’s Real Time Gross Settlement (RTGS) system, directly facilitated 55 percent of all payments. The CARIFS system is an ATM network provider which links the ATMs of commercial banks and credit unions to point-of-sale (POS) outlets to allow 24-hour access to bank accounts. BACHSI engages in direct payments processing, clearing of cheques and daily inter-bank settlement. The CARIFS and BACHSI transactions are ultimately settled through the RTGS, which processes large value and/or time sensitive credit transfers between the domestic banking system and the Central Bank.

For the first six months of 2018, both the volume and value of payments transacted through the Real Time Gross Settlement System (RTGS) outperformed the corresponding period for 2017. This outturn was largely driven by increased sales of Government securities.  However, following Government’s debt restructuring announcement in June 2018 and the subsequent cease-trading order implemented on domestic Government securities, there were significantly lower payments through the system in the latter half of 2018. Consequently, despite an overall 2 percent increase in the number of transactions conducted in the RTGS, the nominal value of these payments was almost 37 percent lower in 2018 when compared to 2017.

The number and volume of transactions processed through Barbados’ Automated Clearing House (ACH) system remained relatively unchanged during 2018. Although cheques[1] cleared through the ACH remained the second largest form of domestic payments in 2018 after RTGS, the number and value of these transactions fell by 3.3 percent and 1.1 percent, respectively. This decline was driven by intensified efforts to move away from paper-based payments towards electronic payments.

Debit and Credit Card Transactions

The growth in debit card usage continued in 2018 with the number and value of these transactions totalling 9.7 million and $1.2 billion, respectively. The value of payments via the point-of-sale (POS) portals grew by 6.7 percent to represent 46 percent of total transactional values of debit cards. Additionally, the value of transactions conducted through ATMs grew by 2.3 percent and remained the major use of debit cards in terms of value, accounting for 54 percent.

During 2018, domestic payments via credit cards fell by one percent, compared to a 1.7 percent decline in 2017. This marginal fall-off in transactions was driven by reduced credit card usage of the personal sector.

Use of Cash

Currency-in-circulation continued to expand, growing by 4.5 percent to represent $784 million or 7.7 percent of GDP by the end of 2018. This is high compared to most of its regional counterparts, and highlights the key role cash continues to play in Barbados’ payment system.

Taken from the 2018 Financial Stability Report.

[1] This includes cheque payments made across banks and with Central Bank but does not include those cheques which are drawn and settled within the same bank.