More merchants are expected to adopt the QR PH P2M system later this year, a move that will take the Philippines closer to its goal of becoming a cash lite society.
In his talk at Brewing@AIM, Conversations with Thought Leaders, Mamerto Tangonan, Bangko Sentral ng Pilipinas Deputy Governor overseeing the Payments and Currency Management Sector, said the National QR Code Standard or QR PH has transformed the fragmented QR driven payment service into an interoperable payment solution.
“It can be used as a viable alternative to coins as it caters to low value, high volume transactions such as payments to merchants, and even person to person, or peer to peer, payments,” he said.
In November 2019, QR PH was made available for person to person or P2P payments such as remittances. From six pilot participants, there are now 20 participants who are offering this capability.
“And from a little over P1 million worth of transactions in November 2019, QR PH transactions have grown to over P661 million by April 2021 with over 72,000 transactions during that month alone,” he said. “So this trend demonstrates the accelerating shift in preference among more Filipinos to more convenient digital mods of payment.”
With the success of the P2P system, QR PH is now being piloted for QR PH merchant payments, or QR PH P2M and this, according to Tangonan, is already offered by si financial institutions and accented by seven financial institutions.
The move to adopt this method of payment was meant to address some of the key challenges in digitizing merchant payments. Tangonan related that “up until today, the dominant digital merchant payment method is the card payment.” However, the cost structure in card payment “is limiting its use to higher end merchants while its fees are keeping the service from the reach of micro and small merchants.”
Smaller players tapped
When compared to QR code enabled payments, this form of payment has the potential to reach “even the smaller players which require less expensive infrastructure to implement.”
“So if you remember in the early 2000 when you were seeing at least five POS or point of sale terminals from different payment providers with as many standees informing us customers that this card. This is very inefficient and costly as one POS terminal costs US$350,” he said.
The simplicity of the QR code, which only entails the use of a smart phone and internet, “gives it the potential to reach even the smaller payers which require less expensive infrastructure to implement.
“The full implementation of QR PH can likewise contribute towards the attainment of a coinless state as QR PH enabled payments may be a viable alternative to coincs, given that it caters to low value, high value transactions such as payments to merchants and person to person payments,” Tangonan said.
QR PH payment was launched last April and is expected to on full commercial launch in September.
“This will empower small economic actors, including those in the informal sector, to take part in the digital payments ecosystem,” Tangonan said. “That is just an important policy objective for us because a large informal sector in the economy could slow down the recovery efforts,” he said.
“It takes time to reduce the size of this giant informal sector and formalize the economy. But, of course, we cannot leave the big merchants behind. QR PH P2M payments can also be used for purchase of good and services in restaurants, pharmacies, supermarkets, hardware and department stores,” Tangonan said.