Dear Editor,
I am prompted to respond to Mr Rajendra Rampersaud’s article of November 16 (Stabroek Business) titled, “The payment systems in Guyana are still too cash based.” I want to just simply reply “so what?” However, I will go further and pose the question: can we really move away from the cash based payment system anytime soon?
Mr Rampersaud argues that the employment of modern technology has revolutionized the way the world does business. This he says has led to a more proficient and effective international payment system; a point I totally agree with him on- especially since I normally send and receive payments through Paypal, Google Checkout and purchase my books via amazon.com and Barnes & Noble.com.
However, I disagree with him when he went on to postulate that Guyanese businesses are still trapped in a time warp by using the “old-fashioned” cash system instead of the “technologically advanced payment systems of the twenty-first century” like domestic e-banking facilities, credit and debit cards, and online utility payment services.
At present, the cash system in Guyana is certainly not antiquated and is an even more efficient and effective payment method than its digital and electronic cousins. Persons using cash for domestic payments don’t have to wait for the seller to verify card and user legitimacy, no user and provider fees are charged, no interest charges, no bogus web-pages to fool you out of your money, and are less prone to confusion and mistakes.
Furthermore, Mr Rampersaud’s hypothesis relies on two crucial assumptions; the first being that a high percentage of Guyanese consumers are computer literate and can therefore utilise online financial resources to carry out payment transactions; the second being that Guyanese consumers have large pocket books (are well off) and will have no problems paying the high interest rates and charges associated with credit cards and internet services. I am not convinced that the majority of the Guyanese consumers fit the two characteristics described above.
Even though the application of digital and electronic technology has made international financial transactions easier and has become a global phenomenon, it is impracticable and uneconomical for local companies in Guyana to invest in costly technology for domestic use when no one (or only a small handful) will be using them because of the technical restraint of not knowing how to use them. It would be interesting to know the level of interest and response to Demerara Bank’s new electronic banking service.
In addition, the move towards credit cards in the developed world was not done primarily to introduce a simplified and more effective payment system but rather for banks and credit card companies to make enormous profits through interest and service charges. This motive seems to be backfiring as of late and according to a Fortune Magazine article (November 12, 2007 edition) titled, “the bomb in your wallet,” U.S. consumers have a record $915 billion in credit card debt and an unprecedented high rate of delinquencies (persons unable to repay). The article went on to state that credit card companies and banks are adjusting their credit card loss reserves by as much as 45% and that credit card debt could become the next economic catastrophe; much like the recent sub-prime meltdown.
Electronic commerce is the way to go, however its widespread introduction into the domestic marketplace would have to wait until we have a richer and more computer savvy populace in Guyana.
Yours faithfully,
Clinton Urling
