GCash is a micropayment service that transforms the mobile phone into a virtual wallet. Currently the leading digital payment app in the Philippines, GCash has more than 79 million registered users. On May 9, some customers complained on social media that they are not doing any transaction but they are seeing deductions from their GCash balance.
GCash was quick to respond. In a statement on the same day, GCash assured its customers that funds are “safe and secure” following a temporary downtime. It said any deduction from accounts will be adjusted before 3 p.m.
“We extended our scheduled maintenance to investigate and determined that no hacking occurred,” the statement read. “We wish to further assure customers that their funds remain safe and secure. We would also like to remind customers never to share their OTP [one-time password) and MPIN (mobile personal identification number].”
OTP is automatically generated and sent to the account holder’s registered mobile number, while MPIN is the numeric password to access the account from the app.
Bangko Sentral ng Pilipinas Governor Felipe M. Medalla said the recent incident involving GCash account holders has prompted the BSP to coordinate with bank and non-bank institutions to resolve issues immediately. “An important e-money company reported its depositors are complaining that they’re seeing their balance is falling although they’re not doing anything. Now, luckily, they were able to respond quickly,” Medalla said in a press briefing. (Read, “After GCash, BSP eyes quick way to settle financial rows,” in the BusinessMirror, May 16, 2023).
“By the way, they are not due to hacking, they’re due to phishing,” Medalla said, as there were some people hastily turning over their one-time password to the scammer. “So, meaning it’s not hacking, it was fooling.”
GCash earlier assured its customers and the public that its application remains safe to use since its management maintains a cyber security program and policy that could deal with any Internet challenges and anomalies.
Gilda Maquilan, GCash vice president for public affairs and corporate communications, earlier reported that after receiving reports of irregular funds’ movement from the subscribers’ accounts, the mobile wallet management immediately conducted a probe and detected phishing as the cause of the problem.
The BSP earlier said that if more Filipinos go cashless, the national government could save a lot of money by way of lower cash printing and coin minting costs. Medalla said the BSP spends quite a significant amount on cash. This is considered a subsidy that makes cash seem cheap for the average Filipino. However, in reality, Medalla said cash is not cheap, especially where the government is concerned. This is the reason for the government’s push for financial inclusion by way of financial technologies. (Read, “Give up cash habit, so central bank can save on costs,” in the BusinessMirror, May 4, 2023).
“Let me first say that cash looks cheap because the central bank absorbs the cost. It costs P10 to make a P20 coin so quite a bit of subsidy of the central bank on the physical cash system. So in a sense, if you literally reduce the demand for cash, the central bank cost for minting will go down,” he said.
Speaking at De La Salle University in October 2017, Jack Ma, founder of the e-commerce giant Alibaba, said: “Philippines, I think you have the opportunity to make the best fintech in the world, because you have so many mobile phones, more than 7,000 islands. We should make Philippines a cashless society. When you have a cashless society, [there is] no corruption. Life is easier.”
The World Bank says financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs—transactions, payments, savings, credit and insurance—delivered in a responsible and sustainable way. The lender considers financial inclusion a key enabler to reduce extreme poverty and boost shared prosperity.
In the Philippines, the lockdowns during the pandemic reinforced the need for increased digital financial inclusion. It would do well for the government to invest in essential infrastructure to improve nationwide digital connectivity. Only then can fintech providers deploy cost-saving digital platforms to reach financially excluded and underserved populations.
Researchers have found that higher levels of broadband adoption lead to economic growth, higher incomes, and lower unemployment. In other words, nationwide broadband availability would spur economic prosperity.
