MANILA - The Bangko Sentral ng Pilipinas (BSP) looks to a more cashless future where all financial transactions are settled on electronic platforms, a central bank official said.
BSP Deputy Governor for the Supervision and Examination Sector Nestor Espenilla Jr. said the local banking system is in fact gradually moving away from cash-based and check-based transactions and more toward electronic transactions.
While he acknowledged there would always be cash transactions in the system, Espenilla said interbank electronic fund transfers remain a “very miniscule component” of financial transactions in the country.
Espenilla said right now, about 95 percent of transactions in the country are still cash-based no matter that this is the most expensive means of settlement and certainly less efficient. He said if households and businesses move significant amounts of cash transactions into the electronic realm, there will be large overall cost savings.
“What we want to see is an interconnected highway that links merchants and users so that for example, if you want to buy something, you can go to any merchant and use any payment means—cash, credit. Debit [transactions are also] convenient and the charges would go down because the highways are wide open. That is what we want,” Espenilla said at the sidelines of the annual event the BSP hosts known as Bankers’ Night.
Espenilla further said a major part of this vision is the merger of the two banking network giants, Megalink and BancNet.
According to the deputy governor, the two network consortiums have already “agreed in principle to go in that direction” after a meeting they had with the BSP early this year.
“The discussion is not as simple as it looks. They are hammering out how this will be operational,” Espenilla said.
He further said this electronic interbank highway has since been planned but has not thus far been put to work in reality.
“But now I am convinced that this is it. We will make this happen this year,” he said.
Espenilla also said the way to control the high cost of transaction is not through price capping but to make it an open-access electronic system so that all the banks in the country can use it. That way there can be competition that can potentially reduce prices in transactions.
“We are getting the banks to cooperate on several things. One is the electronic payments. For that we have to form networks so that needs cooperation. The other one is credit information. So that is also cooperation. And then setting up pricing benchmarks. That also involves cooperation,” Espenilla said.
Earlier, the BSP froze the proposal hiking automated teller machine fees to ensure that the rights of both consumers and the banks are protected.