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In Focus: A Look at Guyana's Payments Modernization Journey

April 14, 2021
Por
Juan Zavala Aleman
Juan Zavala Aleman
Hub Leader - Business Development and Account Manager at Mastercard
📷
WiPay
Guyana has been identified as one of the fastest growing economies in the world in 2020, with an average growth of around 26% -according to the IMF (despite COVID-19).
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Even though most of us have never heard of it, Guyana, as many other developing countries in Latin America, is a true land of opportunities with several untapped industries, which includes oil, technology, and of course the financial services industry.  As we have seen in other countries, innovation has become the key component in the development and improvement of some of industries. Guyana is not the exception of the previous statement. The growth the country is facing is due to some of these untapped industries that are being revamped, transformed, and exploited in ways that haven’t been done before. 

The country is located in the northeast of South America between Brazil and Venezuela, it’s a small country with a population of less than 1 million inhabitants and is considered one of the poorest countries in the South America. However, their exponential GDP growth boosted mainly by the oil industry, could drastically change this in the following years and transform the country’s landscape.  Guyana is going through major transformations in several aspects.  One of those transformations is the Guyana Payment System Project, which focuses on improving and making their national payment system safer, modern, and more efficient to serve and give access to financial services to its citizens. 

Today, Guyana has a quite traditional and “outdated” financial service system with 6 commercial banks and with the majority of the customers centralized in only 3 of them. Their lack of overall infrastructure from an ACH system, shortage of electronic payments acceptance, nonexistence ecommerce infrastructure, complex access to basic financial services, among others, have been some of the main reasons why the Central Bank of Guyana, in 2018, published the national payments system development vision and implementation plan . It focuses on building a strong and efficient payments system for the country and was published with the intention that financial institutions serve better the consumers of today and be prepared for the needs of tomorrow. The project focuses on several areas: 

  • Building the infrastructure for real time payments 
  • Improving processing and settlement of payments among banks through an ACH system
  • Increasing efficiency and lower cost of remittances and cross border payments  
  • Expanding acceptance of electronic payments in merchants, vendors, etc
  • Converting government payments and disbursement into electronic payments methods
  • Building and increasing e-commerce infrastructure and penetration
  • Enhancing and adapting financial regulation and oversight framework

The overall project seems rather ambitious; however, Guyana lacks the basic payments infrastructure to build on it, as well as the cultural mindset that is needed to have a radical transformation in their payment system. Similar to other Latin American countries, Guyana is a cash oriented society, which leads to a low percentage of financial inclusion. In order for this to change, society needs to adapt their mentality and behaviors to see the value of utilizing electronic payments and other financial services. In addition, financial institutions need to make it easy and accessible for everyone. Today the central bank is doing a big effort for this transformation to happen but it has to be a job that involves everyone - regulator, financial institutions, merchants, and general population to really push the agenda for a true transformation of the payments system. 

COVID-19 has played a key role in changing the behavior of the general population in Guyana and has driven people and businesses to e-commerce. However, today the basic infrastructure for accessibility of e-commerce platforms and capabilities to set up a virtual store or accept electronic payments is very limited in Guyana. The existing payments providers are not too focused on these small and medium enterprises (SMEs). But, there are other players like WiPay that are accelerating and trying to capture this opportunity within the SME sector and other such as mobile carrier GTT, that have created a mobile money platform called mmg+. The platform allows users buy, send money, and pay bills within their app that includes several utility companies and local merchants. We will definitely continue to see some of these new players popping up and trying to capture this opportunity during and after COVID-19.  

When a country’s citizens have an entrepreneurial vision, as well as the need to transform and innovate in addition to a strong support system locally (programs, funding, mentoring, etc) then there is a potential to impact the overall entrepreneur landscape of an industry.  We have been seeing the effect that innovation in fintech and payments has had in other Latin American countries where both of these factors exist, such as Mexico and Brazil.  Although, the reality is that today the entrepreneurial ecosystem in Guyana is quite small and not as active as we have seen in other regions. There are a few programs sponsors by the government that support small business with grants, as well as few development labs, startup associations, and a few private investment initiatives, but still with plenty of room for growth. 

This payments modernization for Guyana will be critical for the growth and evolution of the country. As the country is becoming more and more relevant in the global economy, they will need to have a strong, robust, and reliable system that will allow their citizens, businesses, and corporations to be part of the global financial economy. As long as the regulator, financial institutions, merchants, etc. continue to have a strong agenda in modernization and innovation of payments, we will continue to see a positive evolution in the payments ecosystem for the country. We will keep hearing more and more about Guyana, not only from the oil industry but also from new startups, payments modernization, and fintech regulation among others in the upcoming years. 

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

Even though most of us have never heard of it, Guyana, as many other developing countries in Latin America, is a true land of opportunities with several untapped industries, which includes oil, technology, and of course the financial services industry.  As we have seen in other countries, innovation has become the key component in the development and improvement of some of industries. Guyana is not the exception of the previous statement. The growth the country is facing is due to some of these untapped industries that are being revamped, transformed, and exploited in ways that haven’t been done before. 

The country is located in the northeast of South America between Brazil and Venezuela, it’s a small country with a population of less than 1 million inhabitants and is considered one of the poorest countries in the South America. However, their exponential GDP growth boosted mainly by the oil industry, could drastically change this in the following years and transform the country’s landscape.  Guyana is going through major transformations in several aspects.  One of those transformations is the Guyana Payment System Project, which focuses on improving and making their national payment system safer, modern, and more efficient to serve and give access to financial services to its citizens. 

Today, Guyana has a quite traditional and “outdated” financial service system with 6 commercial banks and with the majority of the customers centralized in only 3 of them. Their lack of overall infrastructure from an ACH system, shortage of electronic payments acceptance, nonexistence ecommerce infrastructure, complex access to basic financial services, among others, have been some of the main reasons why the Central Bank of Guyana, in 2018, published the national payments system development vision and implementation plan . It focuses on building a strong and efficient payments system for the country and was published with the intention that financial institutions serve better the consumers of today and be prepared for the needs of tomorrow. The project focuses on several areas: 

  • Building the infrastructure for real time payments 
  • Improving processing and settlement of payments among banks through an ACH system
  • Increasing efficiency and lower cost of remittances and cross border payments  
  • Expanding acceptance of electronic payments in merchants, vendors, etc
  • Converting government payments and disbursement into electronic payments methods
  • Building and increasing e-commerce infrastructure and penetration
  • Enhancing and adapting financial regulation and oversight framework

The overall project seems rather ambitious; however, Guyana lacks the basic payments infrastructure to build on it, as well as the cultural mindset that is needed to have a radical transformation in their payment system. Similar to other Latin American countries, Guyana is a cash oriented society, which leads to a low percentage of financial inclusion. In order for this to change, society needs to adapt their mentality and behaviors to see the value of utilizing electronic payments and other financial services. In addition, financial institutions need to make it easy and accessible for everyone. Today the central bank is doing a big effort for this transformation to happen but it has to be a job that involves everyone - regulator, financial institutions, merchants, and general population to really push the agenda for a true transformation of the payments system. 

COVID-19 has played a key role in changing the behavior of the general population in Guyana and has driven people and businesses to e-commerce. However, today the basic infrastructure for accessibility of e-commerce platforms and capabilities to set up a virtual store or accept electronic payments is very limited in Guyana. The existing payments providers are not too focused on these small and medium enterprises (SMEs). But, there are other players like WiPay that are accelerating and trying to capture this opportunity within the SME sector and other such as mobile carrier GTT, that have created a mobile money platform called mmg+. The platform allows users buy, send money, and pay bills within their app that includes several utility companies and local merchants. We will definitely continue to see some of these new players popping up and trying to capture this opportunity during and after COVID-19.  

When a country’s citizens have an entrepreneurial vision, as well as the need to transform and innovate in addition to a strong support system locally (programs, funding, mentoring, etc) then there is a potential to impact the overall entrepreneur landscape of an industry.  We have been seeing the effect that innovation in fintech and payments has had in other Latin American countries where both of these factors exist, such as Mexico and Brazil.  Although, the reality is that today the entrepreneurial ecosystem in Guyana is quite small and not as active as we have seen in other regions. There are a few programs sponsors by the government that support small business with grants, as well as few development labs, startup associations, and a few private investment initiatives, but still with plenty of room for growth. 

This payments modernization for Guyana will be critical for the growth and evolution of the country. As the country is becoming more and more relevant in the global economy, they will need to have a strong, robust, and reliable system that will allow their citizens, businesses, and corporations to be part of the global financial economy. As long as the regulator, financial institutions, merchants, etc. continue to have a strong agenda in modernization and innovation of payments, we will continue to see a positive evolution in the payments ecosystem for the country. We will keep hearing more and more about Guyana, not only from the oil industry but also from new startups, payments modernization, and fintech regulation among others in the upcoming years. 

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.

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