According to the Philippine Statistics Authority, the country’s economy grew by 6.9 percent during the first quarter of 2016, with its quarterly GDP growth outpacing China’s 6.7 percent growth and Vietnam’s 5.7 percent. Meanwhile, the country is also the fastest-growing market for smartphones, according to IDC.
Even with the rise of digital payment systems, the Filipino people and culture are cash-centric, however, with more than 95 percent of transactions being accomplished through direct physical transfer of money. Meanwhile, the national ATM penetration rate is 23 percent–lower than the global average of 70 percent.
According to the World Bank, there are 23.68 ATMs per 100,000 people in the country, or some 23,680 machines servicing a population of almost 100 million. While ATMs are numerous in urban areas, these are not always easy to reach in rural sites, where people have to travel to reach ATMs to withdraw money. The partnership between FEXCO and ENCASH aims to ease access to cash withdrawals for such underbanked individuals through mobile devices, in partnership with retail establishments.
Focus on rural populations
Since the late 2000s, ENCASH has focused on providing ATM access to rural banks in the Philippines, particularly small financial institutions that cannot afford to interconnect with the major networks. An independent switch network, ENCASH has brought down the cost by acting as an intermediary for rural banks and cooperatives in accessing MegaLink–one of the country’s major ATM networks.
The partnership with Ireland-based FEXCO adds another dimension to this focus on rural areas, through the EasyDebit system. By using a point-of-sale device that plugs into a smartphone’s 3.5-mm audio jack, customers can withdraw funds using their ATM cards even without a machine. Bank account funds are transferred to the account of the merchant, who then hands over cash to the customer, completing the transaction.
At present, the system allows withdrawals from banks connected to the BancNet network, which services at least 41 million account holders across 114 banks.
Easy and Secure
The EasyDebit platform provides a plug-and-play solution, which FEXCO provides on an affordable rent-to-own scheme. Merchants only need to download a smartphone app to work with the plug-in dongle. To make transactions more accessible, the system does not require a minimum transaction nor an average daily balance amount.
Apart from cash withdrawals, the FEXCO system also provides the opportunity to receive payments through ATMs and debit cards, which gives merchants an added opportunity for revenue.
For security, PINs are never stored on the device, and all transactions are compliant with PCI DSS and EMV Levels 1 and 2–security protocols specific to credit card and online banking transactions.
Beyond the Philippine market, FEXCO and ENCASH are also planning to deploy EasyDebit at other locations in the region, particularly Cambodia, Indonesia and Vietnam.
The Philippines has big potential in digital transactions, with the domestic remittance market being described as a dynamic and growing one. Meanwhile, the local e-commerce market is set to grow at a 20.7 percent compound annual growth rate from 2016 to 2020, with at least US$1.3 billion in transactions in 2016 alone. Enabling cash-based transactions through mobile devices adds a new dimension to the thriving economy, which will make financial services–and the opportunity to explore digital transactions–more accessible.