Cashless: The unexpected upside of the pandemic

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AMMAN — The COVID-19 pandemic has had a devastating impact on Jordan and other countries across the world — but it may have a silver lining in the transition to a digital economy. اضافة اعلان

Strict curfews, restrictions on movement, and anxiety about social distancing have led Jordanians to become more open to the idea of using electronic transfers instead of cash to pay for goods and services.

“If the pandemic has any advantages, this is one of them,” said the director general of the Association of Banks in Jordan, Maher Mahrouq. “The pandemic gives us a chance to jump; we reached it in a year’s time instead of three,” said Mahrouq. He added that electronic “transactions jumped by almost 400 percent (in 2020) compared with 2019.”

Similarly, Kheir Abu So’elek, a member of the Lower House’s Finance Committee, said that he believes that cash is on its way out in every part of the world.

The ubiquity of cash and the difficulties of using electronic payments in Jordan have presented problems for at least one Jordanian visitor from abroad who was fooled by a taxi driver.

“The taxi driver used the taximeter, and I saw number 5, so I gave him JD5. I kept waiting, but he did not give me any change, so I got out of the car. My friend later told me it was JD0.5, not JD5!” recalled Rahma (Ma Yue), a Chinese national living in Jordan.

Rahma added that relying on ride-hailing services saved her from being deceived, as these applications pre-calculate the fare and “won’t charge me more.”

Jordan is now working on a project to digitize all governmental payments, according to an announcement published by the Ministry of Digital Economy and Entrepreneurship on March 1st, 2021.

The project entails suspending all cash payments in ministries and government institutions, which saves time for citizens and limits any spread of “petty corruption”, according to Minister of Digital Economy and Entrepreneurship Ahmad Hanandeh.

Likewise, the Central Bank of Jordan is promoting electronic payments during the COVID-19 crisis by facilitating cardless ATM services as well as boosting contactless payment through QR code technology, e-wallets, and electronic channels, according to a Central Bank report.

E-wallets, which are used on smart phones, have been piloted in projects to distribute cash to those living in poverty, such as the Takaful project implemented by the National Aid Fund. Previously the program distributed cash through post offices, but it has since transitioned to distributing aid via basic bank accounts and e-wallets. Similarly, in 2018 the Central Bank of Jordan announced the “Mobile Money for Resilience” initiative in collaboration with the Bill & Melinda Gates Foundation, which seeks to empower refugees and low-income Jordanians with access to electronic financial services.

Digital commerce is not limited to a humanitarian context, however.

“I rely on digital financial services by using bank cards, mobile wallets, and e-bill payment, which helps me control and document payments and spares me the complications of accessing the bank to get cash, which is also liable to be lost,” said Majdi Bsaiso, an assistant professor of computer science at Al Balqa’ Applied University.

Jordan is not yet ready for a cashless society, said Mahrouq. But it is “on the way to becoming ready very soon.” He highlighted the strength of Jordan’s technological and ICT infrastructure, particularly within commercial banks, which has enabled individuals to quickly switch to mobile transactions during the pandemic.

Benefits of a cashless society include lower risks of violent crime, faster processing times, and fewer issues of tax evasion, according to Forbes. Abu So’elek, said that that Jordan’s adoption of cashless payment is necessary to cope with global transformations.

Usage of mobile banking services and e-wallets has multiplied rapidly in the past few years. Whereas in 2018 JOMOPAY — an electronic system for payments and financial services — reported only 0.45 million wallets total, by February of 2021 the total number of wallets hosted on the service reached 1.35 million. Similarly, payment transactions on, a bill payment service supported by the Central Bank of Jordan, increased from 14.5 million in 2018 to 22.6 million in 2020.

Still, a number of obstacles stand in the way of Jordan’s seamless transition to a cashless society, which is the shadow economy. The shadow economy, also referred to as the underground or informal economy, describes “not only illegal activities but also unreported income from the production of legal goods and services, either from monetary or barter transactions”, according to the International Monetary Fund.

The term is expansive, describing everything from an illicit drug dealer to a child begging on the street to a plumber who gets paid in cash and does not report his income to the tax authorities.

“To attain a cashless society, Jordan must accomplish financial inclusion of all citizens, which is done by ensuring all shadow economy laborers are registered in the Social Security Corporation and monitored by the government,” said Abu So’elek in a recent phone interview.

This informal economy accounted for almost 41 percent of total economic activity in Jordan in 2020, according to a report by the Jordan Strategy Forum (JSF). A survey by the International Monetary Fund found that sectors with high rates of informal employment in Jordan include crafts, services, sales, and machine operators. “The ratio makes the move towards a more cashless society even more challenging,” said JSF Director of Research Ghassan Omet.

Considering how Jordan could increase cashless transactions, Abu So’elek said that banks could reduce their service fees for small payments, the government could offer certain discounts for any usage of e-government services, and the private sector could transfer “salaries to employees only through electronic methods.”

For some, the principle of “seeing is believing” still dominates their finances. Abu Hassan, a 48-year-old retailer, stated that he “does not trust cashless payments that are done through the internet and mobile applications.”