The Modernization of the Dominican Financial System: Increasing Adoption of Contactless Credit Cards

The Dominican financial system has been actively modernizing its services and products, particularly in terms of transactional security. According to statistics from the Banco Central of the Dominican Republic (BCRD), the use of contactless credit cards has increased by 60% in 2022. The number of active contactless cards rose from 1,109,315 in 2021 to 1,780,749 in 2022.

This increase in contactless credit card usage is significant, considering that it has only been three years since data collection began. The adoption of new technologies in the financial sector has led to the replacement of magnetic stripe cards with integrated chip cards, which are designed for contactless transactions.

Contactless technology allows users to make payments by simply bringing their card or smart device close to a terminal, without the need for a magnetic stripe reader or chip reader. This technology has been particularly beneficial during the COVID-19 pandemic, as it promotes physical distancing and enhances health security.

The Banco Central started collecting information on the use of contactless cards in 2021. In that year, the number of active cards used with traditional physical readers decreased by 27% to 997,394. The monthly reports from the BCRD also indicate a decrease in the use of traditional credit cards, with the number of additional credit cards (duplicates) decreasing from 114,576 in 2021 to 90,706 in 2022.

In 2023, the number of contactless credit cards has continued to increase. The total number of credit cards without contact stood at 1,977,930, which is 11% more than the previous year’s total of 1,780,749. During the first quarter of 2023, there was a significant gap between contact and contactless cards, with contactless cards accounting for the majority of active accounts.

However, the statistics from the Banco Central also highlight the government’s lag in adopting innovative technologies to reduce fraudulent actions with social assistance cards. As of April 2023, the government issued 1,774,648 cards, all of which still use traditional magnetic stripe and chip technology.

Financial intermediation entities have reported a total of 3,167,899 credit cards in 2023, with multiple banks leading in the channeling of direct credit. The data shows that the largest number of approved cards has been for amounts less than 10,000 pesos, accounting for 22.2% of the total. Cards with approved limits ranging from 25,000 pesos to 50,000 pesos rank second in the BCRD data.

In conclusion, the Dominican financial system has made significant progress in modernizing its services and products, particularly in the adoption of contactless credit cards. The increase in contactless card usage has been driven by the benefits of enhanced transactional security and the convenience it offers to users. However, there is still room for improvement in the government’s adoption of innovative technologies to reduce fraudulent actions with social assistance cards.

How has the adoption of contactless credit cards contributed to the modernization of the Dominican financial system?

N 2021, there were 1,109,315 active contactless cards in the Dominican Republic. However, in 2022, this number increased to 1,780,749, showing a significant rise of 60% in contactless credit card usage. This data highlights the active modernization of the Dominican financial system, particularly in terms of transactional security.

The adoption of new technologies in the financial sector has played a crucial role in this increase. The magnetic stripe cards have been replaced with integrated chip cards, which are specifically designed for contactless transactions. Contactless technology enables users to make payments by simply bringing their card or smart device close to a terminal, eliminating the need for a magnetic stripe reader or chip reader.

The use of contactless credit cards has become even more important during the COVID-19 pandemic as it promotes physical distancing and enhances health security. This technology allows for a seamless and secure payment experience without the need for physical contact with payment terminals, reducing the risk of virus transmission.

It is worth noting that the collection of data on contactless card usage in the Dominican Republic started in 2021. Therefore, the increase in contactless credit card usage from 2021 to 2022 is particularly significant given the relatively short period of data collection. The rise in contactless card usage indicates a positive trend towards the adoption of modern payment methods and the improvement of transactional security within the Dominican financial system.