Defense, budget departments get approval for use of credit cards

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04:12 PM September 7th, 2013

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By: Paolo G. Montecillo, September 7th, 2013 04:12 PM

MANILA, Philippines – The use of credit cards to replace so-called “petty cash” for small purchases at the Department of National Defense has been approved by regulators, in line with the administration’s push to improve transparency in government.

The Department of Budget and Management announced that starting this September, cash will no longer be used to purchase plane tickets, emergency medicine, groceries, and other small items for the various service units of the country’s armed forces.

This follows the Bangko Sentral ng Pilipinas  Monetary Board’s approval of the use of credit cards for small official transactions of the DND and its staff.

“This is just a baby step…. If this is successful, we can roll this out to other departments,” DBM chief information officer Richard Bon Moya said in an interview.

Moya said the use of credit cards by the DND was one of the first steps toward digitizing all transactions in government. The DND was chosen for the pilot project since the department had a reputation of bad record-keeping when it came to funds.

Apart from the DND, the DBM would also take part in the pilot project, which was done in cooperation with the Better Than Cash Alliance, a multinational non-governmental organization that advocates the use of more efficient electronic payment methods instead of coins and notes.

The Better Than Cash Alliance was founded by the Bill and Melinda Gates Foundation, and is partly funded by American financial giant Citi.

The new credit cards for the government will work like corporate credit cards.  Moya said credit limits would be determined based on past spending patterns of each of the DND’s service units, namely the Army, Vavy, the Air Force and the Marines.

The use of the credit cards will also be limited to certain kinds of establishments to avoid abuse. “If they try to use it in restaurants and bars, the cards will be declined,” Moya said.

He said the cards would not augment the petty cash budgets of the agencies involved. Instead, the cards will replace cash that was previously used as the sole mode of payment.

The switch to more cashless transactions in government, Moya said, was a pet project of Budget Secretary Florencio Abad. Moya said because electronic payment methods were more efficient and more transparent, the government stands to save “billions” every year as it minimizes leakages due to corruption and costs related to the handling of cash.

Moya said the project would have been implemented last year, but the DBM had to secure the Monetary Board’s approval because the use of credit cards by government agencies was essentially a loan by the state.

A recent survey by the Better Than Cash Alliance showed that 98 percent of all transactions in the country were still done using cash.

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