As much as P1 for every P5 spent in the Philippines will be transacted through electronic channels in as short as three years levels under a new Bangko Sentral ng Pilipinas initiative to transform the local market into an advanced digital economy.
According to BSP Gov. Nestor Espenilla Jr., the goal of bank regulators is to raise the volume and value of electronic transactions in the country from its present “negligible” level of 1 percent of all transfers to 20 percent by 2020.
“Today, 99 percent of all transactions are still cash- and paper-based,” he said in his first policy speech of the year on Thursday before the members of the Rotary Clubs of Manila, Makati West and Forbes Park in Makati City.
“We want to change that,” he added, explaining that the new payment system being created to facilitate cashless transactions are “going to be a big convenience and will potentially supplant the traditional cheque payment system.”
In particular, the BSP chief pointed out that the new payment system that the central bank is building together with other stakeholders and regulators will also make it easier for retail transactions to be executed using modern electronic methods like so-called “QR” or quick reaction codes.
The system is already gaining widespread acceptance for retail payments overseas and was recently pioneered locally by mobile phone firm Globe Telecom Inc. whose GCash service allows users to QR codes when paying for shopping and dining purchases, among others.
An efficient, secure, and reliable payments and settlements system reduces the cost of exchanging goods and services. It is essential for the smooth functioning of money and capital markets.
More than making payments more convenient, however, Espenilla said moving from a cash-based economy to one where digital payments are more common is crucial towards promoting financial inclusion, since significantly more Filipinos own mobile phones than bank accounts.
Crucial to this effort is BSP’s two-year-old National Retail Payments System (NRPS), augmented by an industry-driven self-governing body development and operations of the retail payment system.
A multilateral automated clearing houses called PESONet was also launched to eventually allow government, private businesses, as well as individuals will be able to conveniently initiate electronic fund transfers and recurring payments to each other’s transaction account.
“These are all part of the initiatives for the Philippines to transition from a cash-heavy to a cash-lite economy,” Espenilla said. “Other automated clearing houses will also be launched this year, including ‘InstaPay,’ which enables 24/7, real-time low-value electronic fund transfers that will support e-commerce.”
“The BSP has also set its sights on digital innovation to reach the financially unserved and underserved,” he added. /je