Last month, the Jamaican government announced two new incentive programs to increase the adoption of its central bank digital currency (CBDC), the JAM-DEX. The measures will reward businesses that accept digital currency at the point of sale, as well as individual users who use the JAM-DEX regularly. The hope is to facilitate their transition toward the digital economy.
Jamaica’s Minister of Finance, Dr. Nigel Clarke, announced the two incentive programs while discussing the new budget for the upcoming fiscal year on March 7.
The first is the “Small/Micro Merchant Incentive Program”, which will reward the first 10,000 merchants who sign up for the official JAM-DEX platform as of April 1, 2023, with a J$25,000 (about $164) deposit. Targeted merchants include food outlets, gas stations, hairdressers and other personal care services. We reported last year that a lack of merchant adoption was holding back the rollout of the CBDC.
The second is the “Wallet-holder Individual Loyalty Program”, which provides regular JAM-DEX users with loyalty points that may be redeemed for things such as 2% cashbacks on qualified purchases.
While all bank account holders automatically qualify for a CBDC wallet, a key goal is to attract non-bank account CBDC users using a simplified KYC program. Last year the government ran a consumer incentive to reward the first 100,000 Jamaicans who signed up for the JAM-DEX with a J$2,500 ($16) deposit. However, only 36,000 people took advantage of the J$2,500 incentive, so the scheme has been extended for up to 60,000 new wallet holders who don’t have bank accounts and sign up using the simplified KYC process.
Nonetheless, the degree of incentives implies that not enough people have yet signed up for the CBDC. The Bank of Jamaica began rolling out the JAM-DEX in 2022 to enhance financial inclusion and support the country’s digital transformation. However, the government reported that, as of February 2023, only 190,000 customers had been onboarded to the Lynk wallet, including 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 uptake of their CBDCs. For example, as China rolled out its pilot program, many regions have offered red envelopes as cash giveaways to encourage users to open wallets. As the pilots progressed, the digital yuan initiatives included coupons and rewards.
