At a media briefing on the progress of PESONet, an automated clearinghouse under the BSP. From left: John Cary Ong, SVP of UnionBank; Dan Ibarra, managing director of BTI Payments; Justo Ortiz, chairman of Philippine Payments Management Inc.; Nestor Espenilla Jr., governor of the BSP; Raymond Estioko, director of the BSP’s Payment System Oversight Department; Jonathan Bates, vice president for finance of Lazada Philippines; and Arlene Nethercott, treasury and trade solutions head of Citibank
Various government agencies are looking to digitize their transactions in the next few months as their partner government banks are already on their way to being part of the Bangko Sentral ng Pilipinas’ (BSP’s) digital initiatives.
“One of the major pushes that we have for technology is to push for government to transition from its current form of collections and disbursements to digital,” said Raymond Estioko, director of the BSP’s Payment System Oversight Department, in a media briefing held last August 7. “Based on our discussions [with them], there is much interest from the government agencies to go digital because it’s more convenient [and] it’s more efficient for them.”
BSP Governor Nestor Espenilla Jr. highlighted that digitizing government payments and disbursements is a “key part” in the BSP’s aim of making 20 percent of the country’s transactions electronic by 2020. With the rollout of the automated clearinghouses under the National Retail Payment System (NRPS) and the positive reception of government banks, Espenilla believes that the digitalization of government transactions could begin in a matter of months.
“The current arrangement is they (the government agencies) have government banks, and the government banks are already gearing up to be able to participate [in our digital services],” said Espenilla in the sidelines of the event. “It’s just a question of months before they are ready. That’s why I’m quite confident that 20 percent is very doable.”
Reaching that 20 percent goal is easier said than done. When the BSP launched its NRPS initiative back in 2015, that figure was only one percent. Progress has been slow ever since, as according to the 2017 Financial Inclusion Survey, only four percent of Filipino adults use their formal financial accounts for digital payments, while only 1.3 percent of the adult population has an electronic money account.
With the NRPS, the BSP aims to decrease the country’s reliance on cash and physical locations to transact. Among the projects under this initiative is PESONet, an automated clearinghouse made to settle bulk transactions in the same day. In the media briefing, the BSP announced that PESONet has cleared Php520.6 billion worth of transactions to date and processed over 3.4 million transactions in the last nine months.
With the imminent digitization of government transactions and with the growth in use of the BSP’s digital services such as PESONet, Espenilla is optimistic that growing the share of electronic payments in the country will be much easier.
“Once government is geared up to participate, I don’t really look at this as a linear growth,” said Espenilla. “Maybe it’s three or four percent now, but it will immediately take off to the 10 or 20 percent league once the bulk users come in.”
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH