When John Bodden had the original idea in 2000 to create what he calls an “Amazon of Cayman,” an online store and payment platform built and run in the Cayman Islands, the barrier wasn’t technology or the market, it was the banks. He couldn’t get a local bank account to take online payments, even if he had credit cards ready to process.
The idea came up again 13 years later when he pitched the idea to his partner, both in business and life, Megan Ritch. In 2013 Bodden made the rounds again, talking to banks about taking payments online, this time with Ritch by his side.
“I do the talking,” she said in a recent interview, and Bodden does the programming. One bank, which did not respond to request for comment, wanted a $10,000 to $20,000 deposit to protect against credit card charge-backs; most of the banks in Cayman would not do an online merchant account.
“You have a dream and you’re trying to figure out how to get it done,” Ritch said. But something as simple as a bank account pushed that dream back for more than a decade.
The owners of Latitude19 know a few things about the troubles online merchants face in Cayman. They run the only local online portal to process online credit card transactions in the country. The company has signed up a number of local businesses, including CaymanAisles and the Cayman Water Company.
Latitude19 Vice President Mike Whalen said, “The key is, keep the money in the jurisdiction.” He gave an example of a dive shop in Cayman, now one of their customers, that used PayPal to take online payments.
Whalen said, “PayPal forced him to use a U.S. account and pay U.S. taxes.”
That dive company needed a Cayman bank to accept online payments and keep the business under the local tax structure. “Without a bank to give you a merchant account, how do you operate?” asks Latitude19 CEO Tim Moore.
“Cayman has a real opportunity to compete globally in e-commerce,” Moore said. “To not have solid e-commerce is a real downside.”
Cecil Chan-A-Sue, with the Cayman Islands Bankers Association, said, “Online payments are usually high risk.” It’s the anonymity of the Internet that concerns the banks. “At the end of the day, it’s up to the individual banks to know who their customers are.”
Online commerce, commonplace in most developed nations, has been slow to catch on in the Cayman Islands. Based on the experience of Latitude19 and CaymanAisles, the banks have been the biggest barrier to getting into the online retail space.
“With Cayman banks, over time we’re hoping they’ll be more open to merchant accounts,” he said. “Scotiabank is the most progressive.”
Bodden and Ritch found their answer with Scotiabank, the Canada-based bank that recently began focusing more on the online merchant services the couple was looking for.
Even with a bank that wanted to help, Ritch said, the layers of rules and paperwork was a maze. “The only thing they didn’t ask for was blood work,” she said. The bank had to know how the servers were protected, the data storage had to meet international standards, and everything had to be documented for the bank.
But it was an improvement, Ritch said. “You no longer go in and talk to a bank manager, you talk to a competent IT professional at the bank,” she said.
CaymanAisles, which offers a suite of Web development and online merchant services, will build a payment system into a customer’s website. The clients for this are mainly bigger law firms and other companies with the resources and wherewithal to get their own merchant accounts and run their own websites. But it’s the smaller companies on the islands that don’t have the resources to sell things online; many don’t even have a Web presence. That’s where Bodden’s “Amazon of Cayman” idea fits in.
The entire online operation, servers and all, are in the Cayman Islands. Latitude19’s payment portal is on servers in George Town. CaymanAisles’s servers are on island too. “Having the payment gateway on island makes banks more receptive,” Whalen said.
“Law firms like credit cards,” Moore said, so that people locally and overseas can easily pay online. He said the local e-pay system means any business on Cayman that can get an online merchant account can take bill payments, tourists can book and pay for diving trips – and for anything else before they’re on island.
The Latitude19 system recently started taking UnionPay cards, similar to Visa or Mastercard, to take payments from the popular Chinese credit card system for local online payments.
But Ritch and Bodden are looking at the island’s small businesses. They have signed up seven local companies so far to post their wares on the CaymanAisles site, available for online orders on island and off. People can log on and buy T-shirts, some sports equipment, jewelry and a limited assortment of other items from local stores. On island, the couple says their company will pick up your purchase and drive it to your front door. Overseas, they will handle the shipping and dealing with customer issues.
Customers can order and pay online for commercial janitorial services or someone to clean their home.
CaymanAisles, Ritch said, is just entering its second year. They have seven stores signed up so far and are focused on the local market for clients, small businesses who want to sell online or take payments, and customers who want to do their local shopping from their home or office computer.