CEBU, Philippines — The Bangko Sentral ng Pilipinas sees it challenging to increase electronic payments in the country given that more Filipinos remain unbanked up to this day.
Speaking at the Innovation Summit in Cebu City on Wednesday, Raymond Estioko, deputy director at the Bangko Sentral ng Pilipinas, said the central bank realized this challenge, noting that only three of every 10 Filipinos are part of the banking system.
That is why, he said, the BSP implemented a policy starting last year requiring banks to offer deposit accounts with less than P100 opening amount and no minimum maintaining balance.
He said this will eventually increase the number of people to be part of the banking system.
The basic deposit account supports the implementation of the National Retail Payments System (NRPS) that aims to increase adoption of digital payments in the country.
However, Estioko admitted the country is still in the early stage in the digital payment adoption.
Currently only about 1 percent of retail transactions in the country are done through electronic channels.
The use of cash and checks still dominates in retail transactions, the BSP official said.
"Another challenge we have is creating awareness among individuals and businesses and make them adopt electronic payments," said Estioko.
Under the NRPS, the central bank targets that by 2020, about 20 percent of retail transactions shall be done through digital channels.
"We need the support of businesses to adopt electronic payments in their operations and local governments to digitize their collections and disbursement of funds," he said
Ownership of an account provides Filipinos the tool to save and transact money in a safe, convenient and affordable manner.
It can unlock access to a wider range of financial services to meet their various needs, including credit, insurance and investments.
According to World Bank Global Findex (2014), only 31.3 percent of Filipino adults have formal accounts. The usual barriers include costs, lack of money, lack of documentary requirements, and perceived low utility of a bank account, among others.
The features of basic deposit account set by BSP include simplified know-your-customer (KYC) requirements; an opening amount of less than P100; no minimum maintaining balance; and no dormancy charges.
These features meet the need of the unbanked for a low-cost, no-frills deposit account which they can open even if they do not have the standard identification documents.
"Banks can customize their basic deposit account product to serve wider markets and harness technological innovations in client onboarding and servicing of the account, provided the necessary controls are in place and the specified minimum key features are strictly observed," the bank regulator had said.
By having a transactional account, the previously unbanked will be able to participate in the digital finance ecosystem and benefit from electronic fund transfers for their remittance and payment needs.
The BSP expects that the basic deposit account will provide the much needed boost in expanding formal account ownership and usage in the country, particularly among the unserved low-income markets.