• AsiaDHRRA taps NATCCO to help Farmers’ Co-op

    EASTERN SAMAR – Many agricultural cooperatives fail due to the inability of its members – mostly farmers – to run its operations.  But for a farmers’ cooperative named Island of Samar & Leyte Agriculture Cooperative (ISLACO), the future looks bright. Read More
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  • Let's Get Digital!

    USAID’s Mamerto Tangonan gave a talk entitled The National Retail Payment System & the Digital Finance Landscape in the Philippines, delivered at the NATCCO Co-op Leaders Congress in Limketkai Luxe Hotel in Cagayan de Oro City for all co-ops to Read More
  • First Co-op Cup Chess Tournament October 21

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Let's Get Digital!

USAID’s Mamerto Tangonan gave a talk entitled The National Retail Payment System & the Digital Finance Landscape in the Philippines, delivered at the NATCCO Co-op Leaders Congress in Limketkai Luxe Hotel in Cagayan de Oro City for all co-ops to adopt the Kaya Payment Platform. 
Whether we like it or not, millennials will soon take over key leadership positions in our organizations.  One of the attributes of our millennials is that they are so ‘digital’.  If we want to attract them as members, we have to generate, otherwise our co-ops will die.  If you want to attract them, then going digital is certainly the way for us to go. 
Why is Digital Payments important?
It drives economic growth.  McKinsey Global Institute studied five growth economies and found that digital payments alone can drive Gross Domestic Product by up to 6%.  Digital Payments makes other business models possible – like thru internet.
Cash under mattresses are not in the banking system, so they cannot be lent out for other productive activities.  The theory here is the multiplier effect of money.  Money in the bank can be re-lent and re-lent.  Labor productivity is also increased due to the increased convenience.
The Asian Development Bank estimates that transition digital payments result in more financial inclusion and could boost Gross Domestic Product (GDP) by an additional 3%.  That is why the Bangko Sentral ng Pilipinas (BSP) targets digital (non-cash) transactions, currently at 1%, to 20% by 2020.  They want to shift from cash payments to “cashlike”.
Digital Payments also have social benefits. Digital Payments are believed to meet 11 of the 17 Sustainable Development Goals of the United Nations.
Data in 2012, the Better than Cash Alliance said out of of 2.5 Billion transactions monthly, only 1% are digital.  2014 data by the World Bank reported that the Philippines is at 2%.  Malaysia is 10%.  Let’s not even talk about Singapore!  We are being left behind.  
According to the Better than Cash Alliance,  the strategy that made impact in other countries is to start with disbursements.  This means governments and businesses should be paying their suppliers, creditors and employees using electronic payments. That will cause more people having more electronic money in their accounts.  Eventually, its use will spread even to small transactions.
In 2016, from a survey of 2,200 Filipinos we found that 73% pay for household bills and purchase goods and services, buy cellphone load, receive and send money.  81% are aware of electronic payments. 23% of those who are aware actually use digital payments.  But only 17% use it actively, or once in 90 days.
We also found that 60% intend to use Digital Payments.  In marketing thought, if there is intent, adoption will follow soon.
The Digital Payments landscape in the Philippines is developing quite rapidly.  You have the opportunity to take advantage of it because your confederation is offering you the platform.  Take advantage and offer it to your members.  There is evidence that the market is ready for digital payments – 60% of people already intend to use it and 63 million of them use smart phones.  
Millennials want to go digital.
Because if you don’t offer it . . . and there is already the National ID system, the banks going down to the grassroots, plus the existence of global money operators who are very aggressive (there are already 11 million mobile accounts in the Philippines), co-ops will be left behind.
In other words, the people have alternatives.  If you don’t offer it, they will get it from someone else.  If they get it from someone else, what else can you offer the people?  Co-ops will become marginalized.  
You have to take responsibility for that!
The Philippines is moving fast towards digital payments.  Your confederation is already providing you the platform.  The market is there.  
Once you are plugged into the National Retail Payment System or Highway, any person from anywhere in the Philippines can send money to the regions.  I can transfer from my bank account to a cooperative account.  
On the question whether Kaya Payment Platform for digital transactions will work in the provinces: It will!  In terms of practicality, there may be trade-offs.  For instance, for small amounts, cash is probably best.  For big transactions and long-distance transactions, digital is better.  But in a recent trip to Europe, I saw people purchase small items using credit cards or electronic money.
In some areas in the Philippines, there is no internet and no electricity so it will be very difficult to transact digitally.  But we need to be patient because this is a journey. Europe and Malaysia did not implement digital money overnight.
On data security, even big banks have security threats.  How can co-ops cope?  There is cybercrime . . . the provider is responsible to make sure that the service is secure.  The BSP issued Circular 982 for the cyber resiliency framework of the digital financial ecosystem.  
I am working with the BSP on this.  If we comply with the framework, which is based on international standards, your provider will be responsible for security.  
When can we catch up with Europe?  That depends on you.  The medium term goal of 20% target for digital transactions in the Philippines -- that’s the Tipping Point.  It’s like you drive a truck uphill and that uses up a lot of power.  Once it’s uphill, it will accelerate.  So let’s work together to reach that goal.  Once that goal is reached, digital transactions will move forward and have a life of its own.  There’s reason to be confident because the innovation cycles now are much faster and shorter.  New products come and go.  If people were taking decades to invent things in the past, now it just takes a few months to launch a product.
We may not necessarily take decades to achieve what other countries have achieved in digital transactions but let’s just work for it.
Puwede ba talaga pumasok ang kooperatiba sa clearing houses?  I strongly believe that co-ops have a distinct advantage because of your membership system.  With the banks, it’s a customer-provider relationship.  But in co-ops, you have members with a “common bond”. That is stronger.
In terms of service quality, price and other attributes, I will patronize my cooperative first because I am part of the co-op.  
So please adopt the Kaya Payment Platform in your co-op!


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