Cashless transactions soar in PH as gov’t, fin-tech firms push e-payment

Cashless transactions or electronic payment ratio in the Philippines have reportedly improved to as much as 10 percent in the first quarter of this year compared to just 3 percent three years ago.

File photo shows Paolo Azzola, managing director of mobile payment firm PayMaya, during the launch of its cashless initiative with Bicol-based mall operator LCC in Legazpi City, Albay

Simon Calasanz, former president of the Credit Card Association of the Philippines (CCAP), said the increase in e-payment in the country can be attributed to the aggressive entry of e-payment platforms and financial technologies (fin-tech) that heavily use QR code payment model.

A QR code is a two-dimensional barcode with a random pattern of tiny black squares against a white background. It is capable of holding 300 times more data than a traditional one-dimensional code.

This code’s popularity was first noticed in China wherein even restaurants have pinned barcode tags to the chests of waiters, waitresses and even chefs. Customers can scan the code to leave a tip if they are satisfied with service.

“There are fin-tech platforms now that heavily use QR code. Visa, Master, JCB and Union Pay have been quick to adapt by coming up with a uniform QR code standard,” Calasanz told Newsbytes.PH.

He said despite the improvement, the Philippines still lags compared to advanced countries when it comes to e-payment ratio. Some of the countries where e-payment is highest include South Korea at 77 percent; Hong Kong at 64 percent; China at 55 percent; Singapore at 53 percent; Taiwan at 27 percent; USA at 24 percent; and Japan at 14 percent.

“I would say Philippines probably at 10 percent to 15 percent,” Calasanz, now president and chief executive officer of Bankard, the fifth biggest credit card issuer in the country.

The official said that in lower ticket transactions, cashless transactions are relatively higher. Lower ticket transactions are micro transactions which are usually less than P200 or P100.

“We have mall statistics and the e-payment ratio there is quite higher at 35 percent to 45 percent, which is decent,” Calasanz said. “This shows that there is a lot of room for e-payment growth in lower ticket size transactions.”

In India, Thailand and Vietnam, he said, even pedicabs, tuktuk and small food stalls accept e-payment through a QR code.

On the local front, PayMaya and fierce rival GCash have been aggressively rolling out QR code-based payment systems in various commercial establishments all over the country in recent months.

Paolo Azzola, managing director of mobile payment firm PayMaya, said in an earlier interview that the company is counting on the latest e-payment initiative of the government to further expand the cashless business model in the country.

Azzola was referring to “InstaPay”, an Automated Clearing House (ACH) launched in April this year by the Bangko Sentral ng Pilipinas (BSP).

InstaPay is under the National Retail Payment System (NRPS), the BSP’s flagship program whose objective is to increase e-payment transactions to 20 percent by 2020.

With InstaPay, ordinary persons, companies and even government agencies can transact in real-time and send and receive funds of up to P50,000 per transaction in a day.

Prior to InstaPay, the BSP also launched the PesoNet — an inter-bank Electronic Fund Transfer platform that can benefit companies that still transact using traditional cash or check payment systems to go electronic.

With PesoNet, businesses can pay their suppliers, their bills, and even their employees electronically even across different banks and financial institutions. It also allows transfer of funds and other volume or bulk transactions among participating banks.

Users can simply log on to the participating bank’s online or mobile banking platform, choose “PesoNet,” or Transfer to Other Bank, enter payment details, press send, and payment is sent to beneficiary’s account within the same day at full value.

“There is no doubt that technology is fast changing and we have to adapt to consumers’ demanding preferences. PesoNet is part of our commitment to upgrade the country’s retail payment system, promote electronic payments, and facilitate inter-operability among financial institutions for faster settlement of transactions, thereby achieving our vision of a ‘cash-lite’ economy,” said BSP governor Nestor Espenilla Jr in a statement.

PesoNet is available on the following banks’ online/mobile channels: ANZ Bank, Bank of America, Bank of China, Citibank, CTBC Bank, Deutsche Bank, Development Bank of the Philippines, Eastwest Bank, JP Morgan Chase Bank, HSBC, Mizuho Bank, MUFG Bank, Ltd., PNB, Shinhan Bank, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation, UCPB, Unionbank and Yuanta Savings Bank. – With Ayed Sison

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