The Government of Jamaica recently announced two new incentive programs to increase the adoption of its CBDC, JAM-DEX. The “Small and Micro Business Incentive Program” will reward the first 10,000 traders to register on the official JAM-DEX platform with a deposit of J$25,000 ($164). The “Individual Wallet User Loyalty Program” provides loyalty points to regular JAM-DEX users that can be redeemed for 2% cash back on qualifying purchases.
The Government of Jamaica recently announced two new incentive programs to increase the adoption of its central bank digital currency (CBDC), JAM-DEX. Such will reward companies that accept the digital currency at the point of sale. As well as individual users who use it regularly. The hope is to ease the transition to the digital economy.
Jamaica’s Finance Minister, Dr. Nigel Clarke, announced these two incentive programs while discussing the new budget for the upcoming fiscal year on March 7.
CBDC Loyalty Programs
The first is the “Incentive Program for Small and Micro-enterprises,” whose aim is to reward the first 10,000 traders to register on the official JAM-DEX platform from April 1, 2023 with a deposit of J$25,000 (about $164). Target merchants include restaurants, gas stations, hair salons, and other personal care services. Last year it was reported that a lack of merchant adoption was delaying the launch of the CBDC.
The second is the “Individual Wallet User Loyalty Program,” which provides loyalty points to regular JAM-DEX users, which can be redeemed for 2% cash back on qualifying purchases, for example.
Although all bank account holders automatically qualify for a CBDC wallet, the goal is to attract CBDC users who do not have bank accounts, through a simplified KYC program. In 2022, the government implemented an incentive to reward the first 100,000 Jamaicans to sign up for JAM-DEX with a deposit of J$2,500 ($16).
Only 36,000 people took advantage of the J$2,500 incentive, though, so the scheme has been extended to include up to 60,000 new wallet holders who do not have bank accounts, and who sign up using the simplified KYC process.
Effectiveness of CBDC Adoption Incentives
The degree of incentives means that not enough people have signed up with the CBDC yet. The government reported that, as of February 2023, only 190,000 customers had registered for the Lynk wallet, which included 185,410 individuals, 90 small merchants, and 4,500 micro-merchants. Lynk is a wallet operated by the National Commercial Bank. The Finance Minister said there were plans for four additional wallets a year ago.
Other countries have also implemented similar incentive programs to encourage the adoption of their CBDCs. For example, in China, digital yuan initiatives included coupons and rewards.
Incentive programs can be an effective tool to drive the adoption of new financial technology, such as CBDC. However, it is also important to address potential users’ concerns about data security and privacy. Also, anxieties may arise about the stability and interoperability of the system, among other key issues.
In this regard, the Jamaican government has taken steps to ensure user confidence in the JAM-DEX and its associated platform. The Bank of Jamaica has established a robust regulatory framework for the CBDC, which includes cybersecurity, governance, and oversight requirements, among other aspects.
By Audy Castaneda
