After years of discussion, BancNet and MegaLink—the two largest banking-network consortia in the country—signed a memorandum of agreement on their consolidation, and look to implement the merger within a year.
Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said at the annual reception of bankers on Friday at the central bank grounds in Manila that BancNet and MegaLink, along with the Bankers’ Association of the Philippines (BAP), are set to formalize their consolidation next week.
“I am happy to share the good news that, next week, the BAP, BancNet and Megalink will formalize the consolidation of the two ATM [automated teller machine] networks,” Tetangco said in welcoming the year, with executives from the various lenders drawing applause.
“This is a milestone that we’ll be looking forward to on the way to the greater goal of establishing a national retail-payment system that will achieve interoperability, efficiency, security and inclusiveness in the way they settle financial transactions,” he added.
According to BAP President Lorenzo Tan, who was also at the event, the consolidation should ultimately help lower the cost of transaction for consumers in the future.
“We’re moving it toward efficiency…. Well, imagine you were dividing the cost over more transaction. So the unit cost will go down. Hopefully, if we can save 10 cents, we pass on the half of that to the consumers. It’s a way of lowering your unit cost, making it more efficient. The more earnings you have, you get more money for research and development,” Tan said.
Asked if the consolidation should also bring down the cost of an ATM, BSP Deputy Governor for the Supervision and Examination Sector Nestor A. Espenilla Jr. answered in the affirmative, but quickly qualified its impact will not be immediate. He also said the BSP will revisit the issue of ATM transaction fees, which vary from bank to bank.
“Yes, definitely. The advantage of the consolidation is it saves on the infrastructure cost. It won’t be double processing. That’s one element. And one thing more that we are seeing happen is that, since there would be multichannels, there would be competition among other modalities of execution. So that will also further drive down costs,” Espenilla said.
Espenilla and Tan echoed the governor’s “end-game” vision of the “e-peso project,” or the establishment of a single retail-payment system, in the Philippines. “While we’re working on an efficient ATM network, we’re going to build the e-peso platform so the future mobile payments, checks clearing, etc., will go in one highway. Hopefully, the future is only one highway for future payments,” Tan said.
“The ATM system is just the first step. The point is in ATM, at the end of the day it is still a cash-based world. The only thing that is automated is the withdrawal of cash—but the payment is still in cash. Our vision is more than that: to encourage more people to transact electronically. It means that you may not even need to withdraw the same amount of cash because you can pay electronically. Right now it is happening, but only in small percentages and there are a lot of inconveniences. So the national retail-payment system interconnects everything—your card or mobile or etc.,” Espenilla said.
“That’s the big idea. but it will take time,” he added.