MANILA, Philippines — Lyka, a social media app, is now flooded with encashment requests from partner merchants spooked by the Bangko Sentral ng Pilipinas’ decision to suspend its operations.
Hotel chains, restaurants, resorts, jewelry stores and other retail outlets hurriedly filed for requests to convert their gift cards in electronic mode or GEMs into cash, industry sources told The STAR.
The requests range from as low as a few thousands to several millions of pesos.
Lyka, however, assured partner merchants that it is committed to service its partners in compliance with the law.
“We wish to inform you that Digital Spring Marketing and Advertising Inc. (Digital Spring) has been continuously in touch with the BSP for the purpose of registering itself as an operator of payment system (OPS), being the official Philippine marketing service provider, licensee and operator of the LYKA mobile application,” Lyka said in a letter to partner merchants on Friday.
Some partner merchants said Lyka has acknowledged their requests to encash and has committed to service this within 30 days, sources said.
Aside from immediate requests for encashment, Lyka’s partner merchants also temporarily suspended the acceptance of Lyka GEMs from customers until the issue with monetary authorities is resolved.
The BSP ordered Lyka to halt its operations until it secures a license from the BSP as an OPS in order to protect the interest of the public.
BSP Governor Benjamin Diokno said the Monetary Board has ascertained that the activities of Lyka mandate it to register with the central bank under Republic Act 11127 or the National Payment Systems Act.
Lyka, founded by a Silicon Valley and Hong Kong–based company, allows its users to purchase, exchange and use GEMs as payment for goods and services.
Users collect these GEMs and use them in hotels, restaurants and other retail stores, successfully creating a digital retail ecosystem.
The merchants, in turn, encash the GEMs with Lyka, which gets a five percent share from the transactions.
The platform’s popularity boomed in the past two years because of the endorsement of Filipino celebrities who heavily publicized their Lyka patronage.
Merchants partnered with Lyka because of its aggressive and innovative marketing ideas which translated to enhanced brand awareness for their companies, sources said.
However, one hotel chain said income generated from Lyka comprised less than 10 percent of the hotel group’s total net income.
Its partnership with Lyka was nonetheless useful in raising brand awareness, especially in this time of global health pandemic.