Jamaica’s Ministry of Finance has launched new incentive programs to increase the adoption of the country’s central bank digital currency (CBDC).
JAM-DEX, the country’s CBDC, has struggled with low adoption since its launch in 2022, particularly suffering the pangs of dwindling merchant use. During the national budget presentation, the country’s Minister of Finance, Dr. Nigel Clark, announced two incentive programs as a way around the lackluster metrics concerning CBDC.
The first of Clark’s plans is the “Small/Micro Merchant Incentive Program,” designed to give $164 to the first 10,000 merchants that register on the JAM-DEX platform. Clark hopes that merchants operating in the restaurant and service industries will be onboarded to give a new lease on life to the CBDC program.
“For us to have an ecosystem where JAM-DEX is used, we need individuals to sign up for JAM-DEX,” Clark said. “For these JAM-DEX wallet holders to use JAM-DEX, it needs to be accepted at the point of sale, particularly in the community.”
Regular users of the CBDC will be incentivized through the “Wallet-holder Individual Loyalty Program” via loyalty points. The Finance Ministry disclosed that the loyalty points are redeemable, and holders can swap them for 2% cash back on certain purchases.
Merchants that register on the platform will be given stickers to indicate their acceptance of the CBDC, as Clark urged businesses to take advantage of the “freeness” before the end of the program. Since its launch, only 190,000 Jamaicans have signed up for the JAM-DEX wallet, and with total transaction activity only valued at $357 million, the government is desperate to drive growth.
The Bank of Jamaica launched the CBDC in 2022 and stated in its policy objective that the goal of JAM-DEX was to improve “financial inclusion” and to facilitate the growth of a digital economy. The central bank confirmed that it is targeting a class of users without traditional bank accounts through the use of a basic Know Your Customer (KYC) program.
Other central banks are leaning on incentives too
The proliferation of different payment alternatives has made CBDC adoption a difficult task for central banks worldwide, forcing some to offer incentives to lure in users.
The People’s Bank of China (PBoC) has relied on incentives to boost adoption metrics for the digital yuan as it seeks to compete favorably with established payment platforms like Alipay and WeChat Pay.
Several Chinese citizens offered shoppers free digital yuan worth $21 million on accredited platforms while also offering the “red envelope” feature as part of the Chinese New Year celebrations.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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