Advocates seek to boost e-payments growth by 2020
MANILA, Philippines – Currently, only 2% of all transactions in the Philippines can be categorized under e-payment methods, which include credit cards, debit cards, and prepaid cards, plus other types of e-money accounts.
That's according to Mamerto Tangonan, who spoke on the sidelines of the E-Commerce Show Philippines 2016 on Tuesday, September 6. The chief of party of USAID E-Peso, a group advocating e-payments, wants that percentage to grow to 20% by 2020.
"The biggest challenge now is that the payment instruments and the accounts are so fragmented. So you can only pay someone who also belongs in the same scheme as yours. So if you're on Bank A, you can only pay customers on Bank A. And if you're on mobile money Z, you can only pay customers on mobile money Z," said Tangonan.
He compared this lack of interoperability to the early days of the mobile telco business where if you were on Telco A's service you could only call people on Telco A's network.
Tangonan said the e-payments market can really take off if financial institutions and establishments can be more interoperable – meaning consumers would be able to move funds from any account to any account without walls separating different institutions.
In 2013, there were 2.5 billion total transactions in the Philippines, said Tangonan. In E-Peso's ideal world, 20% of the total transaction volume would have been completed via e-payments.
E-payments, executed properly, are faster and more convenient to use – and their implementation will "ideally enable [millions of Filipinos] to do more important things," according to press materials from E-Peso.
Tangonan also believes going "cash-lite" would help boost economic growth. "It brings more efficiency, it reduces cost of transaction, and enhances trade," he said.
He also cited a 2003 report from financial institution Moody's, which said that for every 1% increase in cards usage – now a common implement in e-transactions – gross domestic product (GDP) increases by 0.24%.
How do we move towards that figure?
Contrary to popular belief, the problem isn't that Filipinos aren't aware or that they don't trust electronic payments.
In E-Peso's survey of 1,200 Filipino payers – defined as anyone from 15 to 70 years old who has made a transaction – 81% are aware of e-payments, 75% trust current systems, and 60% intend to make use of some form of e-payment.
The number, however, sharply tapers from there. Only 19% of the survey participants said they transacted electronically in the past 12 months.
Tangonan offered several hypotheses. He said the lack of a national ID system makes it hard to open an account and that access points for cash-less transactions are still very limited in number.
But once again, it boils down to the lack of interoperability among financial institutions, he added. If an account or e-payment instrument only allows you to pay people within the same exclusive ecosystem, then it's of limited use – as opposed to being able to pay anybody on any account from any other financial establishment.
If these can be solved, then the industry can make headway. Additionally, E-Peso has also officially launched an online resource portal for the Philippine e-payments industry, Epay Pilipinas, to inform people further about the benefits of e-payments. – Rappler.com