Camilo Thame, Staff Reporter

A credit card reader with credit card.

The rapid growth in the number of point-of-sales terminals across the country over the last few years has led more and more consumers to use plastic instead of cash to make their transactions.

But the high increase in the number of banking machines islandwide has almost cancelled out the lowering effect that greater card transactions has on currency demand.

According to new data released by the Bank of Jamaica last week, electronic funds transfer point of sales (EFTPOS) transactions have grown by approximately 40 per cent a year over the three years to November 2006.

This was placed against the background of currency in circulation growing by 15.7 per cent on average each year over the same period.

The value of credit card transactions during the month of November 2006 was $2.89 billion, higher than the $2 billion in purchases made using debit cards. Also, the value of individual transactions was higher for credit card sales as the number of debit card transactions totalled 638,215, compared to the 503,557 credit card sales made during the month.

The higher use of plastic has been facilitated in large part by the pervasiveness of point-of-sales terminals, the number of which nearly doubled between April 2003 and November 2006, increasing to approximately 14,000 islandwide.

Alternative means of payment, such as EFTPOS typically reduce the demand for currency.

Currency growth

The higher use of plastic, however, did not appear to translate into lower cash in the economy. Currency in circulation has grown at almost the same rate as nominal gross domestic product over the last 10 years - 13.3 per cent per year.

It is the wider distribution of automated banking machines (ABMs), which facilitates access to cash and which increases the demand for currency, that resulted in a cancelling effect.

Since mid-2003, the number of ABMs increased by more than 50 per cent to 380 terminals in November 2006.

camilo.thame@gleanerjm.com