AF Payments Inc. (AFPI), the operator of tap-and-go payments solution beep, denied allegations of profiteering from the more expensive cards that it sells online, reiterating its clarification that cards being sold on train stations are “heavily subsidized” by the private company and the government.
AFPI President Jonathan Juan Moreno said the company has spent more than P300 million in subsidies since it started its operations in 2015. These subsidies are being granted as part of its concession agreement (CA) for the use of beep cards on rail systems in the Philippines.
For 2022 alone, it is expected to spend roughly P48 million in subsidies and is projecting this to almost double to P70 million by next year.
“These subsidies come in the form of the difference between our card acquisitions cost and our selling price. We purchase the card at about $2 to $2.60 —approximately P114 to P148.50— and sell it to rail operators (PTOs) at P50. The PTO further subsidizes P20 and sells it to commuters at P30,” Moreno said.
He added that in sectors not covered by the concession agreement such as bus, ferry, and retail, beep cards are sold at cost or at a price point that factors in the card cost and distribution cost, among others.
“Online channels, meanwhile, would have additional operating costs, packaging, VAT, and commissions to the online platforms, hence priced a little higher.”
AFPI recently announced that it has started selling the beep cards online for P188.
“As a response to a strong clamor from our customers to make beep card available online, AFPI allocated 1 percent of its inventory for online sales. We estimated that this should be enough to fulfill the demand for online customers until the end of the year,” Moreno said.
“However, as of this writing, we may have to discontinue online selling anytime now as we are about to reach 1 percent of allocated cards to be sold online. We have not anticipated that the demand for cards online would be this strong.”
Moreno noted that 94 percent of available cards are being allotted for the PTOs.
“This is despite the rails only constituting 18 percent of our entire ecosystem’s acceptance points. We do this because the transaction volumes are currently concentrated in rail,” he said.
Moreno noted that there is a “global shortage” of chips needed to develop the tap-and-go cards. However, the company is positive that it will still meet its obligations to deliver the cards to the government before the end of December.
“To end on a positive note, we are pleased to inform the public that this week, AFPI has delivered a total of 150,000 cards to the PTOs, effectively supplying 80 percent of the total orders of PTOs for 2022. We are awaiting the delivery of our additional orders in the next few weeks, to be able to supply the balance of 20 percent before the year ends.”
Last week, Senator Grace Poe called on the Department of Transportation (DOTr) to explain the scarcity of stored value cards, saying that such shortage has burdened “already weary commuters.”
A group has also alleged AFPI of profiteering from the shortage.
“We vehemently deny allegations of profiteering by taking advantage of the current global shortage of chips and selling cards at higher prices,” Moreno said.