CEO of The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Edison Sumner said the government's decision to use direct deposits rather than checks to pay bills could lead to an increase in fraud and hacking via online banking services.

By the end of March 2016, the government is expected to begin using direct deposits rather than checks to pay its bills, according to Prime Minister Perry Christie, who cast the development as part of the government's public sector reform program.

"As we move towards that area of making more direct payments, it is incumbent on the banks to ensure the integrity and security of their online systems to mitigate the number of incidents of fraudulent activities likely to occur on those online payment systems," said Sumner.

He suggested that safety procedures need to be in place before the government eliminates check payments.

"My concern with online payment is that we have to ensure the security of the banking system's online payment system itself," said Sumner.

"We have had quite a number of persons who are calling with concerns that credit card systems have been hacked, online banking facilties have been hacked, and there have been fraudulent requests made on accounts," he added.

During his mid-year budget communication on Monday, the prime minister said that a large percentage of government payments are made by direct deposit, specifically those made in respect of employee remuneration and payments to pensioners.

"The focus now is on eliminating check payments to vendors. We are currently on track to effect direct deposits for payments to vendors by the end of March. This will be facilitated through the Bank of The Bahamas. For small businesses this would eliminate the increasingly significant fees banks are now charging to negotiate checks drawn on another bank," Christie said.

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