Utility payments, remittance transactions still done manually despite digital platforms

A TELLER counts US dollars inside a money exchanger in Manila. — PHILIPPINE STAR/EDD GUMBAN

UTILITY PAYMENTS and remittance transactions are still done manually by majority of Filipinos, according to a study by Better Than Cash Alliance which recommended an interoperable platform to streamline these inflows.

An estimate of only 4% of transactions are digital from the 120-130 million in remittances sent monthly from overseas or elsewhere domestically, according to the study entitled “The State of Digital Payments in the Philippines” published earlier this year. Four out of five remittance transactions are still made over-the-counter (OTC), according to the study.

“As a result, Filipinos continue to bear the high cost and the administrative burden of sending remittances through brick-and-mortar branches,” it said.

For utility payments, less than 5% of the estimated 65-75 million utility payment transactions monthly are done digitally.

Payers opt to do OTC transactions for bills payment as well, the study said.

“In fact, it is reported that the average utility bill payment ($10-$30) is so small that the cost of conveyance is often higher than the bill amount. The opportunity cost of transacting in cash combined with the regularity of utility payments builds a compelling case for prioritizing this use-case,” the report noted.

To address some pain points in remittance and utility payments, the study recommended that the country invest in platforms aside from automated clearing houses InstaPay and PESONet launched under the National Retail Payments System of the Bangko Sentral ng Pilipinas (BSP).

PESONet is an electronic fund transfer service that compiles all interbank fund transfer instructions, goes for a batch process, and credits the amount to the receiver by the end of the banking day.

Meanwhile, the InstaPay allows real time transfers worth P50,000 or less with different banks or service providers involved in a matter of seconds or minutes

“One solution is a common P2P (person to person) payment interface that is mobile-first and allows transfer of money from any account to any account,” the study said.

The report also cited a Software Development Kit that could be open source for any payment provider that wishes to utilize the white label interface within their own mobile ecosystem or app.

Another recommendation from the study is an interoperable platform which could link banks and quasi-banks when it comes to bill aggregation that could be conceptualized over the PESONet.

“Such platforms could potentially enable all actors…to offer and push for digital payment options in their businesses,” the study said.

The BSP wants 20% of all transactions to be done digitally by next year. It also eyes to make 30% of the transaction value coursed through e-payment facilities.

The report found that the volume of digital payment usage went up to comprise 10% of total transactions in 2018 from only making up 1% in 2013. Meanwhile, value of e-payment transactions also increased to comprise 20% of transactions last year from 8% in 2013. — L.W.T. Noble