The Market Monitor Minding the Nation's Business
By Riza Lozada
With more than 100 million payment cards issued in the Philippines, the biggest challenge to spur e-commerce remains the accessibility of terminals, according to a recent industry report.
Merchants have been looking for affordable terminal devices, preferably with a unit cost of from P400 to P4,000, compared with the current cost per unit of P16,000, Hybrid Paytech Asia Inc., the solution provider of Smart Telecommunicatons online payment transactions, said.
Hybrid Paytech President and Managing Director Gary Repchuk said cash continues to dominate the local payment system at 90 percent.
“The race to spur electronic payment becomes a challenge to increase business transaction,” he said.
“There is direct correlation between a consumer using card payment and number of terminals in the market. The greater the availability of terminals the more likely consumers will use their card for payment,” he noted during his presentation at the recent E-commerce Cards and Payments fair held at the SMX Convention Center.
“Transition has happened in many countries where the new security standards have been implemented. The rate of adoption has many factors, the largest factor will be the accessibility, capability and proliferation of terminals for Filipinos to use their more than 100 million payment cards,” he said.
The more terminals available and the more schemes the cards can process lead to increased card use, he said.
He added the more the terminals are used by clients, the more valuable it becomes to the merchants.
Repchuck said banks and financial institutions, which process the credit and debit transactions, must provide small and medium enterprises (SMEs) and micro merchants with secure and certified terminals, which can process multiple payment schemes.
He said the success in migration to electronic payments would be similar to the transition from landline phones to mobile phones.
“If you look at Great Britain, MasterCard just announced the Great Flash Growth last year, which was almost 600 percent growth over a year,” Repchuk said.
He added that it took several years and massive deployment of expensive terminals for the United Kingdom to achieve strong growth.
He said the Philippines can emulate this success “if low cost and fully certified POS (point of sale) terminal” is deployed, making it accessible.
“In the Philippines, the migration to EMV credit cards is inevitable, since banks will become irrelevant without adapting this technology, he said.
The EMV, which stands for EuroPay, Mastercard and Visa, is a micro chip-based technology embedded in credit cards to prevent fraud and is being required for full implementation until January 2017 under the regulation of the Bangko Sentral ng Pilipinas (BSP).
“My opinion is that, every system out there is a good system. The challenge is interconnectivity of the systems,” he said.
The proliferation of POS terminals is related also to the costs that merchants can accept.
Repchuk indicated that with the migration to EMV, the financing needs of the banks will have to be considered such that cost sharing becomes an option.
He said the BSP “is keen on this (EMV) as it reduces fraud and in the end protects the individual purchaser which is an important reason for migration to take place.”
Hybrid Paytech has an exclusive partnership with Smart since 2012 for e-commerce transactions with the company set for expansion this year, Repchuk said.
The company provides capability to firms such as Smart and MePay Express and MePay Check Out.
“If we give the banks all the capabilities, the terminals should be set up in places where they have never been present before such as in sari-sari stores or on remote islands,” he said.Hybrid Paytech is being used by Smart for more than 30,000 Smart Money Padala Partners nationwide.