Advancing towards the future of money
Digital has set itself up to become the future of money. That is not to say that physical currencies are on their way to be replaced by numbers on a screen anytime soon, but with the explosive growth of electronic wallets and the benefits they provide in the way of convenience, efficiency, and accessibility, it will be difficult indeed to imagine a world without digital money.
As it celebrates its 33rd anniversary, BancNet, as the first and largest Automated Teller Machine (ATM) consortium in the Philippines, continues to prove its commitment to advancing the financial services system in the country by also becoming the first multi-bank, multi-channel electronic payment network in the Philippines.
Under the leadership of the Bangko Sentral ng Pilipinas (BSP), BancNet played a key role in expanding digital payments in 2022, even as the threat of coronavirus disease 2019 (COVID-19) waned. Throughout the year, BancNet welcomed more financial institutions on board with its established InstaPay use cases, particularly those involving payments to merchants using QR Ph codes.
A new payment use case called Bills Pay Ph was introduced on the InstaPay rail before the end of the year, making digital payments more accessible than ever.
The Bangko Sentral ng Pilipinas and Philippine Payments Management, Inc. launched Bills Pay Ph to be a bills payment facility that enables customers of a participating bank or e-wallet to pay partner billers of other banks and e-wallets, using their mobile banking or e-wallet apps.
Bills Pay Ph aims to provide shared access to more than 700 billers even if the billers’ service providers are different from the customer’s bank or e-wallet. These include local as well as national companies such as basic utilities, telcos, cable providers, schools, and insurance and financing companies.
Bills Pay Ph was designed as a new interoperable facility that would allow customers to pay their bills for utility, rent, subscription, credit cards, loan amortizations and other periodic or recurring financial obligations even with different accounts on different payment service providers.
In the Bills Pay Ph facility, transactions can be performed either by scanning or uploading the QR Ph1 Person-to-Biller (P2B) code, or by manually inputting the payment details for the non-QR mode of payment.
As the clearing switch operator of InstaPay and thus responsible for maintaining its safe, efficient, and reliable operations, BancNet was authorized by the BSP as an Operator of a Designated Payment System in June.
BancNet President Fabian S. Dee told the stockholders that 2022 was a record year for the consortium, playing a pivotal role in expanding digital payments as the country returned to near normalcy and the economy gradually recovered with the waning of the COVID-19 pandemic.
“Our two main businesses — InstaPay and ATM reached new heights in 2022, setting new records in both volume and value. As a result, we closed the year with a net income of P99.14 million and an ROE (return on equity) of 9.82%,” Mr. Dee said.
CEO Elmarie S. Reyes pointed out that BancNet processed a record 1.27 billion interbank transactions in 2022, 19% more than the total in 2021, indicating the consortium’s continuing growth.
Notably, this growth includes 538 million InstaPay transactions which grew by 25% from the previous comparable period. ATM withdrawal transactions, in comparison, were at 389 million which grew by 16% and 124 million point of sale (POS) transactions, up by 25% from 2021.
“We expect the upward trend in transactions to continue in 2023 and beyond. For InstaPay, the interoperable Bills Pay Ph, a service we launched in 2022; our various efforts to expand the adoption of payments to merchants using a QR Ph code; and a new use case we will introduce this year will contribute to this trend,” Mr. Dee added.
Bills Pay Ph is part of the digital payments road map towards achieving the BSP’s goal of converting 50% of retail payments to cashless by 2023. By end 2022, the service was available from 14 participating banks, e-wallets, and a payment center, and 1,362 billers.
Essentially, BancNet has become the core consolidator of the digital payments platforms in the country, integrating all the payments into one ecosystem, so Filipino consumers do not have to have separate ecosystem for their debit cards, another ecosystem for Instapay, and yet another for ATM and other acquiring devices.
“This levels the playing field among financial institutions, whether big or small. They all get access to all products through one link. This coordination brings into the fold as many financial institutions into BancNet — with each one being an enabler itself — and makes it easy for them to be part of the ecosystem,” BancNet wrote.
Adopting to challenges of a new era
Even as total transactions handled reached record highs, BancNet’s robust systems maintained high average switch availability rates during the year, both for InstaPay (99.97%), and ATM transactions (99.98%).
Obsolescence, resiliency, availability and vulnerability are only some of the risks involved in making the transition into a partly digital economy. BancNet, through improving operational efficiency, becoming digital, bolstering cyber security and data privacy processes, and managing business continuity, aims to get ahead of such issues.
Resolution No. 911, issued by the BSP’s Monetary Board in June, designated InstaPay as a Prominently Important Payment System (PIPS) under the National Payment Systems Act.
This means that the BSP places InstaPay under closer supervision and monitoring to protect the public from digital risks.
“In 2023 and beyond, BancNet will continue to be an enabler. Our key role is to allow financial institutions and money or electronic wallets to have interconnectivity with one another. BancNet is the link that opens up a new entrance into the whole ecosystem,” the consortium wrote in its 2022 annual report.
“This is why, now and in the future, stability of operations is crucial. We can sum it up in two words: No Surprises. We have to keep on top of capacity, keep on top of resiliency, keep on top of the battle against cyberattacks, keep on top of technology. A lot of work is involved in making sure that we stay on top of developments. We cannot be left behind because we have the whole industry relying on us. If BancNet falls behind, it will have an impact on the whole economy.”
The Philippines Payments Management, Inc. (PPMI) has given BancNet a contract extension as InstaPay’s clearing switch operator through the year 2024.
In 2022, there were 3.82 million digital payments made to government organizations, up significantly from the 2.68 million made in 2021. Pag-IBIG Fund accounted for 30.21%, Philippine Health Insurance Corp. (PhilHealth) for 31.81%, and the Social Security System (SSS) and the Bureau of Internal Revenue (BIR) for the remaining 0.79%. There was a 19.84% rise, or P64.50 billion more, in the value of these payouts from 2021 to 2022, bringing the grand total to P389.53 billion.
By the end of 2021, just 4,758 person-to-merchant (P2M) transactions had been completed using QR Ph, despite its recent introduction. The limited number of providers was noted as a challenge to expansion.
BancNet sped up the process of adding new users in 2022 by working closely with PPMI and the InstaPay Automated Clearing House. Aware of its place in the evolution of the market, BancNet also implemented tiered pricing for the acquirer institutions so that they could provide free transactions for a subset of merchants.
From just nine at launch in 2021, there were a total of 28 distinct banks and e-wallets by the end of 2022 delivering P2M via QR Ph and/or acquiring merchants. In 2022, P2M deals reached a record high of 2.08 million.
With the introduction of non-QR bill payment in their pilot program in February 2022, BancNet took a giant leap ahead in the world of digital payments. Previously, a QR code could be used to pay one’s expenses.
As the BSP pursues its set goal of moving 50% of retail payments to cashless by 2023, Bills Pay Ph and, in essence, InstaPay will be a key component towards getting there.
“BancNet celebrates its success in expanding digital payments in the new normal. At the same time, we remain grounded in the fact that digital payments are dependent on financial inclusion, not the other way around. The pace of digital payments will pick up with financial inclusion. In all likelihood — over the near future — the world may not go to be fully digital yet, but rather in combination with the physical. This is what we all have to prepare for,” BancNet wrote. — Bjorn Biel M. Beltran
