Single e-payment platform for PH eyed

MANILA, Philippines–Using physical cash to pay for just about everything in the country has to be stopped. It’s inefficient, dangerous and makes little sense given the availability of new technologies that can replace notes and coins.

This is the driving force behind an ongoing project by local regulators and banks, in cooperation with the US government’s chief aid agency, that seeks to promote electronic payments solutions in the country.

“The concept is to minimize the use of physical cash,” said Lorenzo Tan, president of the Bankers Association of the Philippines (BAP). “It doesn’t make sense,” he said in a recent interview, referring to the use of physical cash for virtually all transactions in the country.

Dubbed as the e-Peso initiative, the project is a joint effort by the BAP, the Bangko Sentral ng Pilipinas (BSP) and the US Agency for International Development (USAID). The project’s goal is the creation of a single electronics payment platform for all transactions in the country.

This will replace existing payments highways such as Bancnet and Megalink, among others.

USAID noted in a report late last year that 98 percent of all retail transactions in the country were still done using cold, hard cash. In more advanced countries like Japan, e-payments are responsible for 88 percent of all retail transactions.

In the United States, cash accounts for 57 percent of total payment volumes; 55 percent in France; 61 percent in the United Kingdom, Australia and Hong Kong; and 75 percent in Germany.

The main draw for cashless transactions is that it eliminates the need for cash to be transported via armored cars around the country.

Cashless systems are also more transparent because all transactions are recorded electronically, minimizing losses from pilferage or, in the government’s case, small kickbacks by front liners.

According to Tan, he said the government and the private sector were still ironing out the details on how this single platform could be created. One option is to mimic a similar system built by Samsung in South Korea that serves as the platform for all cashless transactions such as bank withdrawals and even stocks and bond trades.

The main challenge is the project’s unprecedented size and scale, which local firms may find difficult to cope with.

Other projects are also in the works in lieu of the economic integration of the Association of Southeast Asian Nations (Asean).

Tan said countries in the region were in discussions for the creation of a single platform for automated teller machine (ATM) transactions that aims to bring costs down and make it more convenient for consumers to travel in the region.

USAID, in its 2013 report, said switching to cashless modes of payment might bring down transaction costs by as much as 90 percent in the Philippines.