Bermuda’s government is trialling a scheme through which it distributes payments to citizens who qualify for financial support by means of digital ‘tokens’ sent to their mobile-phones.
The project has been in development since last year as part of government efforts to promote the adoption of digital currencies, according to Bermudan media the Royal Gazette, which reported that plans had been accelerated due to the Covid-19 pandemic.
Government payments are sent direct to a ‘digital wallet’ on recipients’ phones. They can then be used to pay for food and ‘essential’ goods and services at participating retailers or vendors by means of scanning a QR (quick response) code on a point-of-sale device.
The government of the British overseas territory, an archipelago that includes seven main islands in the North Atlantic, is working with a Bermuda-based digital payments company, Stablehouse, on the pilot. The retailer or vendor of purchased goods or services is able to press a ‘redeem’ button that transfers the tokens to a Stablehouse government account. Then a cash wire transfer to match the value is paid to the vendor from the government.
The pilot programme is being gradually expanded after being debuted a couple of months ago with 20 people and one local shop, according to a report by news agency Bloomberg.
‘Looking forward to wider rollout’
Bermuda’s premier, David Burt, has personally endorsed the initiative, taking to Twitter to say that he was ‘pleased to have participated’ in the pilot and ‘looked forward to its wider rollout to EEZ [Economic Empowerment Zone] businesses’. He described it as ‘a great showcase of fintech innovation and a step toward making payments more accessible for Bermudian entrepreneurs’.
In Bermuda, which has a total population of about 65,000, an EEZ is an area being targeted for economic development. Currently there are three zones – North East Hamilton, Somerset and St George’s.
“A stimulus token is providing people in need with emergency money,” Stablehouse’s chief executive officer, Philippe Bekhazi, told the Royal Gazette. “The problem is it has been difficult for people to receive their cheques, or bank transfers that are slow or with details are not up to date, or people not banked. What we are proposing is bypassing all the middle-men, bypassing the banks, and air-drop what is basically an ‘IOU’ from the government to the people.”
‘Aiming to set a benchmark for all governments’
Bekhazi explained: “You will go to a website and register your ID, and the government will airdrop to you a certain amount of money. It will be immediate and you will have it on your phone wallet. For consumers, it alleviates the dependency on cash amid the ongoing health concerns, while providing an easy and convenient payment channel. Together, with the government, we aim to set a benchmark for all governments around the world to pursue digital stimulus solutions.
“Bermuda is fairly small, It’s a great place to try new technologies. We are regulated by the BMA [Bermuda Monetary Authority], and are in a good position to be doing this in a bigger way. It’s going to be the first of its kind.”
Bermuda has so far recorded 180 cases of coronavirus and nine deaths, according to the most recent government update published on 19 September.