Macro • April 12, 2021, 2:37PM EDT

Here's what happened when I tried to use the Bahamian Sand Dollar

Quick Take

For the past half-year, the Bahamas has been rolling out the world’s first functional central bank digital currency, but the process has been uneven.
Near the end of March, the government stepped up its efforts to get the Sand Dollar in use.
The Block decided to try out the Sand Dollar for ourselves.

When the Central Bank of the Bahamas announced that its digital currency, the Sand Dollar, had gone live in October, the unveiling left more questions than answers.

Maybe it had something to do with the Facebook post that officially heralded the Sand Dollar, or the website, which, at the time, provided limited information on how to actually obtain Sand Dollars.

Subsequent months have seen the launch of a more informative website and functioning apps meant to support the burgeoning ecosystem for this particular central bank digital currency, or CBDC.

In March, the IMF began promoting the Sand Dollar’s rollout, with Bahamian Central Bank Governor John Rolle providing an overview of some of its technological features. On March 25, the Finance Ministry held a press conference to say that it would be incorporating the Sand Dollar into a unified payments platform for government agencies. The central bank has, in turn, published regulatory proposals clearing the way for the new monetary development.

Intriguingly, the Sand Dollar is also blockchain-based, standing in contrast with other notable CBDC projects around the world. This includes the digital yuan under development in China, which officials have explicitly said does not operate using distributed ledger technology.

But what's it like to interact with the world's first, live central bank digital currency? In an effort to understand the user experience, The Block gave the Sand Dollar a try.

Open to all comers?

It is mainly with an eye to tourism that the Central Bank of the Bahamas left international access to the Sand Dollar open, said Kimwood Mott, who manages the project.

Mott told The Block:

“We're very heavy on tourism here in the Bahamas. It’s our primary industry. Therefore, it's been designed so that individuals flying into the country can convert physical cash or even convert cash from a credit card into Sand Dollars in order to operate in the local space.”

The resulting system makes the Sand Dollar theoretically accessible to non-residents, non-citizens, including this correspondent. However, in a bid to reckon with potential money laundering risks, Sand Dollar wallets are subdivided into three tiers, with Tier 1 and Tier 2 meant for individual users.

Tier 1 requires minimal know-your-customer information but restricts balances to no more than $500 and monthly transactions at $1500 (keep in mind that the Bahamian dollar is pegged 1-to-1 with the U.S. dollar). Requiring government-issued ID, Tier 2 bumps those numbers up to $8,000 and $10,000, respectively, and allows the user to link to a bank account. Tier 3, meanwhile, is reserved for merchants.

I went through the hoops to get Tier 1 Sand Dollar access. Upfront impression: the actual product is remarkably efficient and smooth, from a UX standpoint.

However, getting to a Sand Dollar wallet is far from a smooth process at this juncture, primarily due to mismatches between the two layers comprising the central bank and the private payment providers involved in the system.

How to Sand Dollar?

First, you need to gain access to a Sand Dollar app. The central bank has such an app, but that requires a 16-digit activation code from an "authorized Sand Dollar agent," which ultimately proved to be a red herring.

Instead, the central bank advertises one of seven authorized issuing agents, or payments companies that serve as intermediaries between the Sand Dollars and the retail spenders.

Getting a hold of one of these intermediaries was a challenge. After using the phone numbers, contact forms and email addresses available on their respective websites, six of those providers — Omni, Suncash, MoneyMaxx, IslandPay, CashnGo, MobileAssist — are, to all appearances, inaccessible. This process resulted in dead phone lines, defective email addresses, and the occasional wrong number connecting the caller to a confused civilian.

Even using these firms’ respective applications proved problematic. IslandPay, for example, requires a Bahamian phone number to sign up. Omni, meanwhile, allows Canadian and US numbers to pass its lowest threshold of KYC, but doesn’t feature any mention of the Sand Dollar within its app.

Only one provider, Kanoo, responded to The Block’s request for info. The Sand Dollar, despite that separate central bank app, is only usable through the Kanoo application itself. The 16-digit activation code mentioned was never a factor.

The good news is that the Kanoo app features a remarkably easy-to-use interface, with options to load Sand Dollars from in-person cash deposits at certain merchants or by using a credit or debit card remotely.

Within the app, the “Sand Dollar Card” sits alongside the Kanoo Cash Card as well as any other debit or credit cards loaded on the system. Kanoo allows a user to pay any of its existing merchants using the Sand Dollar — an odd feature that seems to allow quicker integration but also greater dependence on the app to convert funds to and from Sand Dollars to other formats.

Scale of adoption

If the above sounded like a shaky process, that’s because it felt like one. The world’s first publicly available CBDC has yet to turn the Bahamian economy on its head, but it is active and accessible.

The central bank acknowledged this when contacted for comment. According to Mott, "we're still in the very infantile stages of the rollout."

At the moment, available merchants are primarily retailers and food service providers, with a strange proliferation of churches and beauty product suppliers.

When asked about loading cash into a Sand Dollar wallet, the help desk at Kanoo told The Block: “To load funds, it would have to be an agent. Agents are authorized to load funds. Our biggest agent is Super Value.” Super Value is the Bahamas’ largest chain of grocery stores. A series of calls to various branches proved two things: They accept Kanoo and Omni payment, but nobody knew about the Sand Dollar. Meaning, while you can use the Sand Dollar at such outlets, it is usable via third-party partners, and public visibility is limited.

So who are the users?

“At latest review, we had close to about 2,000 wallets onboarded since October. Sand Dollars in circulation went up 157% and are close to $200,000 right now,” according to Mott.

Bahamian geography played a strong role in pushing the country to deliver the first working CBDC. Island-hopping cash delivery is tough, especially in the wake of hurricanes that periodically damage physical infrastructure, including banks. Hence, getting the Sand Dollar into users’ hands seems to have been the priority.

The next steps, however, will depend on smoothing out access to the Sand Dollar to retail customers. Right now, the dependence on third-party apps means that the Sand Dollar doesn’t feel any more connected to the central banking system than those apps’ native payment systems.

Beyond that, the government expects to streamline Sand Dollar payments for ever-bigger purchases, which you can already see with March’s announcement from the Ministry of Finance. Though he insisted that the Sand Dollar will not bear interest or fluctuate in value and will, thus, be unlikely to function as any sort of investment itself, Mott said the central bank is piloting Sand Dollars in bigger financial transactions internally.

Citing one example, he said:

“The sale of Treasury bills may start happening in Sand Dollars or being allowed to settle in Sand Dollars. Also, any dividends that are generated from those T-bills can be disbursed in Sand Dollars going forward.”