Electronic Payments can help in PH Financial Inclusion

I have always believed that shifting to an electronics-based payment system can and will contribute to the financial stability and inclusion in the Philippines. And just recently, the head of the Bangko Sentral ng Pilipinas (BSP) has echoed the same sentiments in his keynote speech at the 25th anniversary of BancNet, Inc.. The BSP Governor Amando M. Tetangco, Jr. mentioned that digitization of payments can help expand financial inclusion in the country, the central bank chief noted.

The National Retail Payments System is expected to be rolled out next year as indicated by the PH central bank. Citing studies conducted by the global public-private group Better Than Cash Alliance, Mr. Tetangco said that Filipinos make about 2.5 billion payment transactions per month worth $74 billion, but only 1% of these are transacted electronically.

The central bank’s planned National Retail Payments System (NRPS) which promotes electronic payments in the country is expected to “contribute to the stability and efficiency of the financial system and the economy as a whole.”

“Studies have shown that shifting from paper based to electronic-based payment system can generate an annual savings up to 1% of gross domestic product,” Mr. Tetangco mentioned in his speech.

“Our National Baseline Survey in Financial Inclusion showed that only four out of 10 Filipino adults currently have savings, of whom only 32.7% put their money in banks. The survey also indicated that 47% of Filipinos have debts but banks contribute only 4.4% of their borrowings; the rest are from family, relatives, friends and informal lenders,” Mr. Tetangco also said.

“99% of the transactions are paid either in cash or checks. NRPS will allow us to start reversing this ratio. In other words, you have the option to have a bigger slice of this huge pie,” he said.

About Bancnet and MegaLink:
A memorandum of agreement was signed earlier last January 2015 that would start the ball rolling for the consolidation of BancNet, MegaLink, and Expressnet, the country’s automated teller machine (ATM) networks.

BancNet will be the surviving entity after the consolidation. At present, inter-ATM and interbank transaction charges of the three ATM networks range from Php5.00 to Php15.00. BancNet was the first ATM consortium to operate in the Philippines, starting with eight member banks led by then-Equitable PCI Bank and Security Banking Corp. Today, BancNet is comprised of 34 of the country’s largest banks.

Megalink is a consortium of 17 commercial banks with a combined network of 2,921 ATMs nationwide. Expressnet member banks, meanwhile, include Ayala-owned Bank of the Philippine Islands, BPI Family Savings Bank, BDO Unibank, Inc. and Land Bank of the Philippines. Some MegaLink member banks are also reconnected with Expressnet.

In 2010, the country’s three ATM networks interconnected their points-of-sales, allowing card holders of their member banks to make debits anywhere.