Digital payment: safety, efficiency in the next normal

Posted by watchmen
September 14, 2020
Posted in OPINION

A recent article in The Economist focused on one of the game-changing effects of the COVID-19 global pandemic — the need to digitize government services. With the pandemic effectively shutting down physical interaction, government services have to be available in the virtual world. This is particularly important when it comes to releasing government benefits that can help Filipinos survive the economic effects of the pandemic.

The article has many good — and not-so-good — examples  of how digital payment systems are used. In Florida, the volume of applications for unemployment insurance caused their website to crash for a number of days. People had to visit government offices for help. The same thing happened with Italy’s social security website, which received 300,000 applications daily. Worse, hackers submitted fake claims.

On the other hand, some countries had minimal problems, thanks to how they embraced digital services. Estonia, for example, has a system that links bank accounts to a citizen’s registered information; identifying people in need and sending them benefits was a relatively easy process. Taiwan went a different route: they used their health insurance system for an economic stimulus program for small businesses. People could go to an ATM with their insurance cards to reclaim cash used for applicable goods and services, like meals.  A document by the Better Than Cash Alliance also showed that Mexico saved nearly $1.27 billion in distribution costs for pensions, social welfare transactions, and salaries once it had an effective system.

Here in the Philippines, digital payment systems are sorely needed. In fact, the growth in digital payments in our country is at 27 percent to 30 percent, higher than the 25 percent average in emerging Asian countries. Still, this only counts as one percent of 2.5 billion payments per month.

The Bangko Sentral ng Pilipinas has data that gives clues as to why online transactions seem to be so limited: 37 percent of cities and municipalities across the country do not have banking offices, and 81.3 percent of households in Metro Manila have no bank accounts. The reality these numbers represent is disheartening — and, on a certain level, dangerous. People have to physically line up for cash aid from social amelioration programs, which exposes both government employees and beneficiaries to infection. A digital payment system would have prevented these physical transactions from taking place.

This is why I filed Senate Bill 1764, or the Use of Digital Payments Act of 2020. It is a counterpart to the bill filed by Bataan Representative Jose Enrique Garcia III.  Senate Bill 1764 aims to promote the universal use of safe and efficient digital payments for financial transactions involving the government and the general public.

Under this act, all national government agencies (NGAs), government-owned and controlled corporations (GOCCs), and local government units (LGUs) will be mandated to use effective digital payment systems. These will be used for tax collection, fees, tolls, payments for goods and services, and other similar transactions. All of the aforementioned government entities will be required to adopt account-based disbursements, so that targeted recipients will receive government payments directly through their bank or online accounts.

The Bangko Sentral ng Pilipinas (BSP) will accelerate the process by adopting a national Quick Response (QR) code standard. This will be used to unify QR-driven payment services, allowing merchants and clients to minimize the number of accounts they have to use. LGUs will also support this move by requiring local merchants to adopt compatible and interoperable digital payment systems as a prerequisite for business permits. Finally, the Department of Science and Technology and the Department of Information and Communications Technology will adopt measures that will make the cost of internet access lower and more readily available. This will not only support government programs and services that will adopt digital payment systems, it will also encourage the general public to shift to digital transactions.

Filipinos need reliable, secure, and easily-accessible digital payment systems not only for government services, but for the economy as a whole. They will be important tools for us to adapt to the next normal, as they will improve social distancing efforts and welfare support. We need to develop them now, not later, so we can prevent needless suffering and lay the foundations for the digital future of our country.



Sen. Sonny Angara has been in public service for 16 years — nine years as Representative of the Lone District of Aurora, and seven as senator. He has authored and sponsored more than 200 laws. He is currently serving his second term in the Senate.



Email:| Facebook, Twitter & Instagram: @sonnyangara/WDJ

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