Home Digital Currencies Jamaica’s CBDC used for government ‘seasonal work’ payments

Jamaica’s CBDC used for government ‘seasonal work’ payments

Jam-Dex: promotional activity has been island-wide to encourage CBDC use | Credit: BoJ Instagram account

One of the world’s first operational central bank digital currencies (CBDCs) – Jamaica’s ‘Jam-Dex’ – has been used to make government payments to seasonal workers in two localities on the Caribbean island. 

The use case is likely to prove interesting for public servants worldwide who are seeking to understand and find examples of how CBDCs can – and indeed are – being used as a tool to try and help with financial inclusion.

Bank of Jamaica (BoJ) said in an announcement that Jam-Dex had been used for payments made through the ‘Employment Generation (Christmas Work) Programme’ – and this would be the first of further government programmes to use Jam-Dex as ‘a safe, convenient and secure digital means of payment and for the furtherance of the inclusion of segments of the population that would otherwise not have been represented in the financial ecosystem’.

Jam-Dex went live in July last year, with state authorities and digital wallet provider National Commercial Bank (NCB) striving to stir up interest. The BoJ and NCB – whose ‘Lynk’ digital wallet is the only digital wallet, at present, usable for Jam-Dex payments – collaborated on the Christmas Work Programme initiative alongside the government’s Constituency Development Fund, as well as politicians and community representatives in North West St Andrew and South East St Andrew.

The next government payment programme targeted for Jam-Dex use is a social and welfare programme under the Ministry of Labour and Social Security (MLSS). This is slated to happen in the second quarter of this year.


Making, receiving and accepting CBDC payments

Jamaica’s Employment Generation Programme comprises a number of physical infrastructure and social assistance projects. One of these is the Christmas programme, with work typically including improvements to roads and pavements (and employing 200 to 300 people per constituency). The Constituency Development Fund assists Members of Parliament with funding.

The pre-Christmas use of Jam-Dex to make payments in North West St Andrew and South East St Andrew involved three contracting companies, which managed the work and made the payments; more than 100 workers signing up to the Lynk app; and more than 70 small merchants (mainly market vendors and owners of food shops, restaurants and bars). This enabled participants to (respectively) make, receive and accept payments in Jamaica’s CBDC.

The three contractors were given the option of either paying workers in Jam-Dex or in physical cash by cashing-out (converting Jam-Dex to cash) at NCB ‘intelligent’ ABMs (iABMs) – advanced versions of automated teller machines (ATMs). All participating contractors and workers opted for Jam-Dex, the BoJ told Global Government Fintech.

Although there was no direct financial incentive for workers to choose the CBDC over physical cash, the BoJ promoted benefits as including: being included for the first time in the ‘formal’ financial sector and ‘bolstering self-assurance in interfacing with a digital means of payment’.

Jam-Dex payments to the value of more than J$600,000 (about £3,200/US£3,930) were made from 19–23 December 2022 to workers across both constituencies.

Second CBDC digital wallet on-boarded

In launching Jam-Dex, Jamaica became the biggest nation in the Caribbean to go live with a CBDC. In October 2020 the Bahamas launched the ‘Sand Dollar’ to become the first nation worldwide to launch a CDBC and the Eastern Caribbean Central Bank launched ‘DCash’ as the first CBDC within a currency union (the Eastern Caribbean Currency Union – ECCU) in 2021.

The BoJ, government departments and NCB have undertaken various campaigns to encourage – and also directly financially incentivise – people to use Jam-Dex.

Jamaica’s finance minister Nigel Clarke announced in March 2022 that the first 100,000 Jamaicans establishing wallets after 1 April would receive an incentive payment of J$2,500 (about £13.20/US$16.40) from the government. The state’s cash carrot appeared to be a smash hit with an announcement on 30 June that this threshold had been hit.

Lynk-branded marketing activity to encourage sign-up has included ‘virtual townhalls’ to encourage retailers to accept CBDC, as well as (digital) cash giveaways capitalising on national celebrations marking 60 years since Jamaica gained independence from the United Kingdom. A six-week roadshow dubbed ‘Mek Di Lynk’ involved dancers and brand ambassadors.

A second digital wallet provider, JN Bank, was on-boarded to Jam-Dex last month. The bank has been finalising its wallet app for public use, with the JN wallet set to go live for CBDC scheduled to commence ‘this year’.

The BoJ said that further wallet providers are being assessed in its fintech regulatory sandbox (test space for new fintech solutions) in preparation for joining NCB’s Lynk and JN Bank’s wallet in the CBDC club.


Government payments using CBDC

The Christmas Work Programme was mentioned in a Jamaica Information Service (JIS) update on 25 August 2022 as one of the ‘public subsistence payment programmes’ being ‘targeted’ by Lynk.

The government agency’s update – ‘LYNK to Support Government’s Agenda of Digital Adoption’ – also mentioned the ‘Programme of Advancement Through Health and Education (PATH)’.

Lynk’s chief product officer, John Matthew Sinclair, was reported by the JIS at the time as saying that the developers of NCB’s platform are seeking to engage government entities ‘that do micro payments in cash or cheques, to promote and utilise payments on the platform’. He added that traditional payment methods are ‘inconvenient and expensive for both the government and the recipient’.

“We plan to, through Jam-Dex, do a lot of the government payments, enabling supporting entities such as the tax office and other government agencies on Lynk or digitally through the mobile wallet,” Sinclair is reported to have said. “It is easier, it will be faster, and it should be more economical, as it creates the convenience where Jamaicans don’t have to physically go and collect the cheque, then cash it and then use it.

Transaction limits when using Lynk have changed. In August last year the weekly transaction limit was J$175,000 (about £925/US$1,145). At the time the Lynk website stated that the bank was ‘working on increasing that soon while keeping with the Bank of Jamaica regulations’.

As of today (23 January 2023), the Lynk website states that ‘for cashing in, limits are $50,000 [about £263/US$327] daily from a bank account and $50,000 monthly from a debit/credit card; for cashing out, limit is $100,000 [about £526/US$654] daily for a bank account; and for transferring to another Lynk user, limit is $100,000 daily’. It adds that ‘new limits are coming soon to give [Lynk users] even more spending power’.


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‘Jamaican authorities and digital wallet provider push to promote CBDC use’ – news story (9 August 2022) on a public education and promotional campaign to encourage the use of CBDC

‘Jamaica prepares for Jam-Dex as CBDC recognised as legal tender’ – news story (28 June 2022) on the passage of the Bank of Jamaica (Amendment) Act 2022 by the Senate

‘Jamaica’s central bank digital currency sprints forward: Natalie Haynes interview’ – interview (4 February 2022) with the BoJ’s CBDC implementation committee chair

‘Jamaica to launch digital currency after pilot success’ – news story (5 January 2022) on the BoJ announcing that its eight-month CBDC pilot project had been successful, with activities having included NCB on-boarding a small number of consumers and merchants

‘Jamaica sets out digital currency ambitions’ – news story (23 March 2021) on the government setting out the timetable for a CBDC’s introduction