A FULLY DIGITIZED social payments scheme could help save the government $100 million annually, according to a study published earlier this month.

The Better Than Cash Alliance study entitled “The State of Digital Payments in the Philippines” also said the fully digitized disbursement of social payments may also result in about 11 million accounts, thereby improving financial inclusion.

“Digital transfer of social benefits can be the first step in the digital payments journey for a large number of financially excluded Filipinos. This can have a knock-on effect on other digital payment use-cases,” the study said.

Sought for comment, FinTechAlliance.ph Chairman and Rizal Commercial Banking Corp. Chief Innovation and Inclusion Officer Angelito “Lito” M. Villanueva said decreased expenses could come from the “huge administrative costs from manual disbursements of payouts thru cash conduits.

“This is aside from the expensive cash handling involving transporting and securing those physical bills in various far-flung cities and municipalities,” he said in a text message.

Based on data collated by the study, the conditional cash transfer scheme in the country benefits over four million households, which is among the largest globally.

Additionally, the country’s social benefits system mandates all private and public sector employees to be registered to the Social Security System and to the Government Service Insurance System for those employed in the public sector.

“Of all social benefit payments, 45% are made digitally (primarily using cash cards). The remaining 55% of payments not yet digitized presents a real opportunity,” the study said.

“Imagine having all [social benefit payment] transactions digitally. It would surely result to cost savings, efficiency, transparency, security and speed,” Mr. Villanueva said.

Meanwhile, the study recommended that the technical working group (TWG) for Public Finance Management (PFM) of the Department of Budget and Management (DBM) should continue its push to encourage government agencies the use of electronic payments as different offices are currently at different points of progress in terms of their adoption of digital payments.

“The discussions of the TWG may include allowing the government to contract vendors after conducting due diligence,” the study said, noting that it would help budgeting decisions for the DBM while allowing agencies to look into transaction fees for digital payments to suppliers and individuals.

Last week, the Bangko Sentral ng Pilipinas (BSP) said the report found that the volume of e-payments usage in the country grew to 10% of total transactions in 2018 from barely making up 1% in 2013.

Value of e-payment transactions also increased to comprise 20% of transactions, from 8% in 2013.

The central bank targets to make 20% of transactions digital by 2020 and also wants 30% of transaction value done through e-payments.

Mr. Villanueva said the BSP will “no doubt” hit its target for volumes. — Luz Wendy T. Noble