Why Caribbean Entrepreneurs Need Better Digital Payment Solutions

Entrepreneurs who want to set up their business online and send or receive money digitally know it is not easy. With limited mobile app and credit card access, the majority of the region does not have access to banking and or to online payment solutions to reach regional and international clients.

(photo via Sugapay)

The Problem of Present Business Transactions Online

Taxation, banking requirements, transaction holds and tedious signup requirements create the biggest headaches for Caribbean businesses, freelancers and entrepreneurs. It also does not get any easier from Caribbean island to island. Currently, there is no cohesive regional banking system and there are restrictions on access to US bank accounts. Most businesses have to rely on local banking institutions and Central Banks to conduct their national and international transactions.

Credit cards, VISA and Mastercard are used everywhere but there is still a high number, 60 per cent of the region who do not have access to a bank account. Also, fraud and money laundering are two of the biggest challenges for payment facilitating organizations and banking institutions.

But 2020 has catapulted many businesses into the digital environment. It has forced these companies, small business owners and freelancers to reassess how they do business. Over the past few years, there have been developments in the area of payment processing in the region.

Some Caribbean Businesses Are Creating Cashless Payment Solutions..

Barbados (mMoney)

Barbados has mMoney which is a payment app for clients and they can conduct transactions with 600 businesses on island. The Barbados Government also expressed interest in launching a mMoney pilot in 2018.

St. Kitts and Nevis (Caribepay)

In St. Kitts and Nevis, citizens have access to Caribepay. A magical cashless payment solution which does not require Internet or electricity! The benefits are that any business or governmental organization can sign up for the service, it takes a matter of seconds for transactions to go through, payment options are flexible and no bank account is needed.

Trinidad and Tobago (WiPay and FAC)

The twin island has several banking institutions but only two main ways of sending online payments. WiPay is a free to sign up service with clients only paying fees for completed transactions. The organization will require verification of business registration and a business account. WiPay has expanded to St.Lucia, Guyana, Jamaica and there are also plans to operate in Barbados. The second option, FAC or First Atlantic Commerce allows companies to resolve payments through local channels without fees or exchange rates.

Antigua and Barbuda (SugaPay)

Antigua Credit unions have over $60 million (USD) in assets and with this wealth, SugaPay was introduced to the market. The company formed in 2013, is the ”region’s premiere electronic financial transaction (EFT) solutions, enabling modern mobile payments and transactions”.

With credit unions often excluded from traditional banking systems, this system allows similar banking and transfer of funds services but through credit unions.

The Bahamas (Island Pay)

In The Bahamas, Island Pay provides consumers and merchants with an alternative online system to receive and send funds using a mobile app. Island Pay users can also register for National Insurance Board (NIB) using this platform.

What Are Your International Online Payment Options in the Caribbean?

All of the above mentioned online payment solutions have limited functionality. These options do not facilitate online business transactions between islands or internationally. They also do not benefit all without high fees and specific sign up requirements. Alternatively, the following international payment solutions are not equally accessible in the Caribbean.

PayPal

PayPal is available in the Caribbean but for many island territories there are restrictions on receiving and sending payments. Users must have a credit card or debit credit card to sign up, the PayPal account can be linked to a US bank account or there is an option to receive a cheque by mail. In the region, US cheques can take up to 25 days to be cleared by local banks. PayPal can withhold funds for up to 21 days and some individuals can lose access to their accounts if the company’s policies are violated. Transactions fees on PayPal are lower than traditional banking fees and the website uses all major credit cards.

Payoneer

Similar to PayPal, Payoneer is widely available but funds go straight to the MasterCard (no need to transfer to bank) and transaction fees are low. But the users will have a US account created and will have to pay an annual fee to receive its services. The process to sign up can be lengthy and it is not convenient for businesses that want to do transactions immediately. Businesses can only transfer to other Payoneer account holders, and individual users can only withdraw and not transfer funds.

Stripe

This online payment solution is created for a US market but other countries including Caribbean territories can gain access. There are several steps an online user must take to set up an account. For freelancers who are unable to receive payments via Pay Pal, Stripe may seem like a viable option but this platform also has similar challenges as the others (holding funds, complicated set up process).

Learn about Stripe for Non-US Residents here https://youtu.be/KmPVHhg7zXY

What Is The Best Solution for Caribbean Entrepreneurs and Businesses?

What Is The Best Solution for Caribbean Entrepreneurs and Businesses?

Caribbean entrepreneurs and businesses need a system which enables them to send and receive payment virtually using a secure and easy online payment application. It should be mobile friendly, protected at a government level and insured. Users should be able to use it between island territories and internationally. Unfortunately, this type of system does not exist.

The Biggest Obstacle…

Research indicates that the biggest challenge for regional entrepreneurs is traditional banking systems and outdated governmental financial legislation. From observation, a lack of reliable Internet and poor IT infrastructure also hinder Caribbean governments from implementing online payment systems for small, medium and large enterprises. As 2020 comes to a close and more problems arise (increased unemployment and decreasing economic activity), it is hoped that the present situation will result in a change in e-Commerce systems and online payment solutions.

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