e-peso activity 8 quarterly reportpdf.usaid.gov/pdf_docs/pa00n2b4.pdf · coa commission on audit...

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E-PESO ACTIVITY

8th Quarterly Report Second Quarter, Year Three, January 1 – March 31, 2017

First Submission: April 28, 2017

Prepared for the United States Agency for International Development by Chemonics International Inc. under Contract No. AID-492-C-15-0001. The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

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CONTENTS 1. PROGRAM OVERVIEW AND INTRODUCTION .......................................................................... 52. ACTIVITY IMPLEMENTATION PROGRESS ..................................................................................... 7

2.1 Progress Narrative ............................................................................................................................. 72.2 Implementation Status ..................................................................................................................... 142.3 Implementation Challenges ............................................................................................................ 202.4 PMP Update ....................................................................................................................................... 23

3. INTEGRATION OF CROSSCUTTING ISSUES and USAID FORWARD PRIORITIES ......... 263.1 Gender Equality and Female Empowerment ............................................................................. 263.2 Policy and Governance Support ................................................................................................... 263.3 Public Private Partnerships ............................................................................................................. 28

4. STAKEHOLDER PARTICIPATION AND INVOLVEMENT ......................................................... 295. MANAGEMENT AND ADMINISTRATIVE ISSUES ........................................................................ 296. LESSONS LEARNED .............................................................................................................................. 307. PLANNED ACTIVITIES FOR NEXT QUARTER INCLUDING UPCOMING EVENTS ....... 32

ANNEX 1: Press Coverage and Mentions ........................................................................................... 35ANNEX 2: Summary of Results to Date by Key Indicator .............................................................. 37ANNEX 3: CDI Snapshot ......................................................................................................................... 47

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ACRONYMS

ACH Automated Clearing House

AFI Alliance for Financial Inclusion

ATM Automated Teller Machine

ATVI Auto Top-Up Ventures Inc.

BAP Bankers Association of the Philippines

BFA Bankable Frontier Associates

BIR Bureau of Internal Revenue

BPLS Business Permit and Licensing System

BSP Bangko Sentral ng Pilipinas

BTCA Better Than Cash Alliance

BTMS Budget and Treasury Management System

CDI Cities Development Initiative

CEPALCO Cagayan de Oro Electric Power & Light Company

COA Commission on Audit

COWD Cagayan de Oro Water District

DBM Department of Budget and Management

DBP Development Bank of the Philippines

DICT Department of Information and Communications Technology

DILG Department of Interior and Local Government

DOF Department of Finance

DOTr Department of Transportation

DQA Data Quality Assessment

DSWD Department of Social Welfare and Development

DTI Department of Trade and Industry

EBPLS Electronic Business Permitting and Licensing System

EFT Electronic Fund Transfer

EIU Economist Intelligence Unit

FICCO First Community Cooperative

G2P Government to Person

GPH Government of the Philippines

HDMF Home Development Mutual Fund

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ICT Information and Communications Technology

IFAS Inclusive Finance Advocacy Staff

JMU Joint Memorandum Circular

LGU Local Government Unit

M&E Monitoring and Evaluation

MOA Memorandum of Agreement

MOU Memorandum of Understanding

NATCCO National Confederation of Cooperatives

NBSFI National Baseline Study on Financial Inclusion

NRPS National Retail Payment System

P2G Person to Government

PALECO Palawan Electric Cooperative

PCHC Philippine Clearing House Corporation

PFG Partnership for Growth

PhilPaSS Philippine Payments and Settlements System

PMO Project Management Office

POS Point-of-Sale Device

PSA Philippine Statistic Authority

PSMB Payments System Management Body

SGM Settlement Guarantee Mechanism

SME Small and medium enterprises

USAID United States Agency for International Development

UV University of the Visayas

USAID/E-PESO 8th Quarterly (Y3 Q2) Report 5

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1. PROGRAM OVERVIEW AND INTRODUCTION

Program Name: E-PESO Activity

Activity Start Date And End Date: March 18, 2015-March 17, 2020

Name of Prime Implementing Partner: Chemonics International, Inc.

[Contract/Agreement] Number: AID-492-C-15-00001

Name of Subcontractors/Subawardees:

Leonine Initiatives MicroSave Private Ltd.

Major Counterpart Organizations

Bangko Sentral ng Pilipinas Department of Budget and Management Department of Interior and Local Government Department of Social Welfare and Development Bureau of Internal Revenue

Geographic Coverage (cities and or countries)

Philippines

Reporting Period: January 1, 2017 – March 31, 2017

The E-PESO Activity is a USAID/Philippines program supporting the objectives of the U.S.-Philippines Partnership for Growth (PFG), which focuses on addressing binding constraints to achieve sustained, more inclusive economic growth. With 98% of payment transactions in the Philippines taking place through cash, promoting a shift to electronic payments (e-payments) represents unrealized potential to promote inclusive economic growth. E-PESO partners with the Government of the Philippines (GPH) and the private sector to achieve a rapid, widespread increase in e-payment adoption and usage. Through program activities, E-PESO’s goal is for e-payments to account for 10% of retail transactions by the year 2020. To shift from a cash-based economy to electronic, E-PESO supports the development of a lasting, inclusive economic environment and sets the stage for new financial products to enter the market that explicitly meet the needs of those striving to improve their lives. Enabling access to electronic transaction accounts will provide the backbone needed to ensure that majority of Filipinos can use e-payments, which provide a secure and cost-effective means to access a full range of payment and financial services. This broader range of financial services can help Filipinos build assets, better withstand economic shocks, and participate more broadly in the formal economy. E-payments also offer an improved ability to track financial flows in line with GPH’s thrust towards greater transparency and accountability in financial transactions. E-PESO builds on the GPH leadership in promoting e-payments as a vehicle for expanding financial inclusion. Recognized in 2014 by the Economist Intelligence Unit (EIU) as one of the global leaders in promoting financial inclusion, the Philippines’ successful track record in deepening financial inclusion mirrors worldwide trends: Countries that institute national financial inclusion strategies tackle poverty at a higher rate than those that do not. Leading the charge, the Bangko Sentral ng Pilipinas (BSP)’s National

USAID/E-PESO 8th Quarterly (Y3 Q2) Report 6

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Strategy for Financial Inclusion capitalizes on global trends and focuses heavily on ensuring that majority of Filipinos have access to electronic transaction accounts. Over the next five years, Filipinos will benefit from new, more affordable and innovative e-payment products, an increased number of outlets through which to spend electronic money (e-money), improved transparency and accountability in their transactions with government, and a strong regulatory environment that protects consumers. The exponential growth in e-payments will stimulate private sector investment where all adult Filipinos have access to critical financial services and set the stage for a more inclusive society. To fulfill PFG goals and E-PESO objectives, the activity focuses on four components:

• Component 1: Rapid Adoption of E-payments in Financial Systems. Incentivizing adoption of e-payments, the activity supports digitization of large-scale payment streams in both the private and public sectors. E-PESO will provide technical assistance to GPH agencies in improving their services by expanding the use of e-money and e-payments in government-to-person (G2P) and person-to-government (P2G) payments. E-PESO also works to bring the benefits of digital payments to targeted businesses that have national reach or local impact, including businesses such as those from the fast-moving consumer goods industry that have large retail payment flows.

• Component 2: Infrastructure for E-payments Expanded. To increase the value proposition to customers using e-payment instruments, E-PESO promotes interoperability among the various digital finance products, services and players (e.g. mobile devices, ATMs, debit/credit and stored value cards, electronic fund transfers (EFT), banks, e-money issuers, payment service providers, e-money agent networks and other financial service providers). E-PESO also supports the complex array of front-end and back-end providers, backstopping them to connect users as well as reduce transaction and search costs.

• Component 3: Enabling Environment for E-payments Improved. Building trust,

convenience, and security in e-payments, E-PESO supports the BSP in its initiative to establish a National Retail Payment System (NRPS), intended to rationalize the fragmented payments system into an interoperable and interconnected one. E-PESO provides technical assistance as BSP oversees the implementation of the NRPS. The activity likewise provides technical assistance and training to support BSP in promoting digital security, consumer protection, e-payments confidence, financial inclusion, and e-payment stability within the broader payment system.

• Component 4 (cross-cutting): E-payment Ecosystem Developed in Key Cities Identified under USAID’s Cities Development Initiative (CDI). Promoting global knowledge sharing of emerging trends, E-PESO identifies and addresses supply and demand constraints inhibiting broader e-payment usage, including addressing policy and regulatory gaps. E-PESO also supports the expansion of e-payment ecosystems with focus on key cities identified under USAID’s CDI.

USAID / E-PESO 8th Quarterly (Y3 Q2) Report 7

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2. ACTIVITY IMPLEMENTATION PROGRESS 2.1 Progress Narrative

Indicators Year 1 Actual

Year 2 Actual

Year 3 Annual Target

Y3/Q2 Target for the

Quarter

Y3/Q2 Actual for the

Quarter

Performance Achieved for

Y3/Q2, Actual vs. Target (%)

Desired Impact (DI): Efficient, Transparent, and Inclusive Retail E-Payment System Contributing to Broad-based Growth Indicator DI 1&2: Increased economic opportunity, a. Number of e-payment users(a)(d) New Cumulative b. Percent of population 15 years old and above who are e-payment users(b)

0

10.9 million

16.1%

0.503 million 11.4

million

16.2%

0.45 million 11.85 million

16.5%

--

--

--

--

--

--

n/a

n/a

n/a Indicator DI 3: Transparency and efficiency of the retail payment system improved. (This indicator will be tracked under outcome Indicator 3.1 - Financial regulation refined to manage growth of e-payments.) Indicator DI 4: More predictable and reliable financial tools for the poor, Number of financial products, services or applications that are designed/enhanced to meet the needs of low income clients, New Cumulative

0 0

1 1

2 3

0 1

0 1

-- 100%

Desired Purpose (DP): Scope of E-Payment Usage Reaches Tipping Point for Scale Indicator DP 1: E-payments accounting for at least 10% of all retail payment transactions, Percent of e-payments accounting for retail payment transactions

1.03% 2.76% 5.32% -- -- n/a

Indicator DP 2: Growth in the number of active e-payment users to reach scale,(c) Number of active e-payment users,

New Cumulative

0

6.9 million

--

10.2 million

0.4 million 10.9

million

--

--

--

--

n/a

n/a

Notes: (a) Baseline for e-payment users refer to registered e-money accounts as of December 2014. (b) Number of e-payment users over number of Philippine population aged 15 years old and above derived from the Philippines Statistic Authority (PSA) census projections (http://www.nscb.gov.ph/secstat/d_popnProj.asp, accessed May 17, 2016). (c) Baseline from Better Than Cash Alliance (BTCA) Philippines Country Diagnostic Study, July 2015. However, yearly targets are derived from the 2016 Philippine Individual Payments Baseline Study that covers all types of electronic card


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instruments (ATM/debit cards, credit cards, pre-paid cards, and e-money cards). Updated based on USAID approval of March 1, 2017 to reduce E-PESO work requirements. (d) Baseline from Inclusive Finance Advocacy Staff of BSP as of December 2014. Yearly targets are derived from the BTCA Philippines Country Diagnostic Study, July 2015, and the 2016 Philippine Individual Payments Baseline Study that covers all types of electronic card instruments (ATM/debit cards, credit cards, pre-paid cards, and e-money cards). * Proposed changes to target. - Philippine Household Survey on Payments renamed to 2016 Philippine Individual Payments Baseline Study For Indicators DI 1&2, E-PESO used baseline data provided by the Inclusive Finance Advocacy Staff (IFAS) of the BSP and the Philippine Statistics Authority (PSA) census projections. The data is based on the number of e-money accounts reported by e-money issuers. It excludes data on ownership and usage of credit cards, debit cards linked to deposit accounts, as well as prepaid cards issued by entities that are not supervised by the BSP. However, with the use of E-PESO’s 2016 Philippine Individual Payments Baseline Study, the data will now include credit cards, ATM/debit cards, pre-paid cards, and e-money linked cards. Further, Indicators DI 1&2 only have annual targets since the method to track the indicator is through surveys conducted once every two years by E-PESO. Hence, there is no additional quarterly target to report. On the other hand, financial tools referred in Indicator DI 4 are products, services, educational materials, technology and the like that allows access and use of e-payments by the poor. Indicator DI 4 has a target of two for Year 3. To measure e-payment usage reaching the tipping point for scale, Indicator DP 1 data is derived from the Better Than Cash Alliance (BTCA) Philippines Country Diagnostic Study that looked into e-payments transactions across individuals, businesses, and government. However, targets are derived from the USAID E-PESO 2016 Philippine Individual Payments Baseline Study and the PSA population projections for 2015 and 2020. Similar to Indicators DI 1&2, Indicators DP 1 and 2 only have annual targets since the method to track the indicators is through the 2016 Philippine Individual Payments Baseline Study conducted once every two years. Hence, there is no quarterly target nor results. Component 1: Rapid Adoption of e-Payments in Financial System


Year 2 Actual



Quarter


Quarter



Desired Outcome 1: Rapid Adoption of E-Payments in Financial Systems Indicator 1.1: Adoption of new e-payment services as collection/ disbursement option in five (5) national GPH agencies, New Cumulative

1 1

1 2

1 3

0 2

0 2

-- 100%

Indicator 1.2: Adoption of m-money and e-payments in all cities of PFG CDI and other cities/municipalities, Number of CDIs (and other cities/municipalities) that introduced or enhanced m-money and e-payment options, New Cumulative

3 3

3 6

3 9

1 7

0 6

-- 86%


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Indicator 1.3: New e-payment implementation and adoption by 500 (small, medium, and large) businesses, Number of businesses introducing or enhancing e-payment options as a result of E-PESO support, New Cumulative

4 4

1 5

95 100

20 40

0 5

-- 13%

Indicator 1.4: Over 25,000 people trained (via consumer education) on the uses of e-payments and m-money services for improved household financial management, Number of people trained (via consumer education) on the uses of e-payments, New Cumulative

272 272

8,876 9,148

852 10,000

0

9,148

0

9,148

-- 100%

E-PESO continued to support cities under the CDI for Year 3 Quarter 2, such as Batangas City, Cagayan de Oro City, Puerto Princesa City, Quezon City, Valenzuela City, and Zamboanga City. E-PESO also continued to expand work on e-payment with new CDI Tagbilaran City. For Quarter 2, the target of one additional CDI city adopting e-payments was not met. The planned launch of Iloilo City’s online business permit payments using Visa credit card and selected Bancnet ATM cards did not materialize in March 2017. Signing of the MOA with DBP was delayed due to hectic activities surrounding the ASEAN meeting in Iloilo during March that took attention away from the local government unit (LGU) on e-payments. Launch eventually took place in April 2017. For Year 3 Q3, the target is to activate one CDI for e-payment adoption, which will be either Puerto Princesa City or Tagbilaran City. The Puerto Princesa City LGU signed an memorandum of agreement (MOA) with Landbank for the Electronic Payment Portal (EPP), but it needed to be reintroduced to the new Mayor and the technical working group after former Mayor Bayron left office in January 2017. Personnel from the Tagbilaran City LGU recently moved into their newly renovated City Hall and computer hardware and infrastructure were prioritized to serve the LGU and collection services. Similar to Puerto Princesa City, Tagbilaran City LGU is using Etracs LGU Software system from Rameses in Cebu. Tagbilaran City LGU is scheduled to sign the MOA with either Landbank or DBP by May 2017. Rameses-Etracs earlier communicated that due to their existing workload they can only pursue completion of the e-payment module for Tagbilaran and Puerto Princesa by June 2017. E-PESO’s Component 4 lead will meet with Etracs in April to discuss timelines and details to meet the end of June deadline. An alternative plan may be to launch a light version of online real property tax (RPT) payments and shall be implemented by the first week of May if Rameses is unable to deliver by June. During this quarter, E-PESO continued to see a lag in the adoption of e-payments by target businesses by 20 and a cumulative backlog of 35 small and medium enterprises (SMEs). This is largely due to their focus on traditional sales and payment efforts, rather than trying new payment channels, which takes time and effort. E-PESO is currently addressing this issue-- whereas in the past, the strategy was to approach large companies individually and target their supply chain, the current strategy is to focus on


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payment aggregation points businesses need to pay, such as taxes. Since large companies take time to decide on adoption, E-PESO is now building the value chain for these aggregation points to provide a robust value proposition to adopt e-payments, particularly by SMEs.

E-PESO is currently working with the Bureau of Internal Revenue (BIR) to expand e-payment collection capability for all tax payments. While this should encourage businesses to adopt e-payments to improve the corporate tax payment experience, E-PESO's next plan is to extend this value chain by enabling computerized accounting software providers to connect to the BIR e-payment gateway. The aim is to enable the wide corporate customer base of these computerized accounting software providers to not only manage their clients’ accounting books, but also to file and ultimately pay their taxes electronically. In a way, this empowers businesses to adopt electronic filing hand-in-hand with e-payments. This wholesale approach is expected to bring in more SMEs and hit E-PESO targets for the year.

For the rest of Year 3, E-PESO will increase similar efforts to on-board businesses in e-payment adoption by working with other agencies such as Philhealth and the Pag-ibig Fund, payment aggregators, and small-to-medium financial institutions (FIs). The latter two can offer bill payment and merchant payment solutions to SMEs and businesses in semi-urban and rural areas. Collaboration with such partners during Quarter 2 can bear fruit later this year. Component 2: Infrastructure for e-Payments Expanded


Year 2 Annual



Quarter


Quarter



Desired Outcome 2: Infrastructure for E-Payments Expanded Indicator 2.1: Growth of front-end e-payment infrastructure expanded, Number of institutions supported by E-PESO to improve and/or expand their front-end infrastructure, New Cumulative

10 10

8 18

5 23

0 18

0 19

-- 106%

Indicator 2.2: Back-end e-payment infrastructure strengthened, Number of institutions supported by E-PESO to improve and/or expand their back-end infrastructure, New Cumulative

10 10

5 15

5 20

0 15

0 15

-- 100%

Indicator 2.3: E-payment infrastructure gaps identified, Number of gap analysis reports at industry or ecosystem level(a), New Cumulative

0 0

3 3

0 3

0 3

0 3

-- 100%

Notes: (a) This indicator refers to gap analysis reports done in large scale among industry players or the payments ecosystem. This does not refer to infrastructure gap analysis done at the firm level or agency level. * Proposed changes to target.


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E-PESO made significant strides in Quarter 2 under Component 2 despite not having a Component Lead and staff. Front-end infrastructure strengthening covers growth of channels where customers can access e-payments, and supports for agnostic cash-in/out (CICO) agent networks. For e-payment channels, E-PESO helped Zamboanga City develop and launch its online payments for RPT using any Visa credit card and will soon be expanded to accept selected Bancnet ATM cards. During this same period, E-PESO was also working with Iloilo City to launch their online business permit fees payment system using Visa credit cards and select Bancnet ATM cards. Strengthening the back-end infrastructure requires supporting the use of technology in clearing and settling e-payment transactions, as well as supporting GPH in transitioning to e-payments. For Quarter 2, E-PESO began scoping assistance to the Department of Budget and Management (DBM) and Bureau of Treasury in rolling out the Budget and Treasury Management System (BTMS) to other national government agencies beyond DBM and BTr. With the expected institutionalization of the automated clearing houses (ACHs), Component 2 efforts with banks for back-end integration to the ACHs will commence later this year to further support to the Philippine government’s move for e-payments adoption across major sectors of the economy. For Year 3 Quarter 2, there were no scheduled gap analysis reports as part of E-PESO’s budget rationalization for the period.

Component 3: Enabling Environment for E-payments Improved


Year 2 Actual



Quarter


Quarter



Desired Outcome 3: Enabling Environment for E-Payments Improved Indicator 3.1: Financial regulation refined to manage growth of e-payments,

a. No. of circulars, regulations, and/or local ordinances refined or clarified to support e-payment growth,

New Cumulative b. No. of public-private dialogues to

support strengthening e-payment environment,

New Cumulative

2 2 7 7

5 7

10 17

3 10 3 20

0 7 0 17

0 8 2 21

-- 114%

200% 124%

Indicator 3.2: Increased competition among m-money and e-payment platforms, Number of policies removed or added to reduce barriers and encourage competition(a), New Cumulative

0 0

0 0

1 1

0 0

0 0

-- --


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Indicator 3.3: Interoperability in the national payment system achieved(b), Level of Interoperability. Batch EFT Real-time EFT

0 0

4 1

2 2

-- --

-- --

-- --

Indicator 3.4: Increased consumer awareness and trust in e-payments(c),

a. % of population 15 years old and over aware of e-payments,

b. % of population 15 years old and over that trust the e-payment(d) system

25.6%

52.0%

67.73%

61.46%

69.0%

63.0%

--

--

--

--

--

--

Indicator 3.5: Security measures in e-payments strengthened, No. of guidelines developed and forums held that promote awareness on digital security best practices or consumer protection, New Cumulative

0 0

1 1

0 1

0 1

0 1

-- 100%

Indicator 3.6: Global knowledge-sharing on e-payments promoted,

a. No. of articles promoting e-payments

New Cumulative b. No. of global knowledge-sharing

events that highlight the Philippines e-payment environment/players

New Cumulative

14 14 2 2

18 32 5 7

4 36 1 8

0 32 0 7

11 43 0 7

1,100% 134%

-- 100%

Notes: (a) Increased competition among m-money and e-payment platforms is a contextual indicator. This indicator refers to the number of policies removed or added to reduce barriers and encourage competition in e-payments. In collaboration with the BSP, targets shall be determined after identifying policies that foster competition. (b) Interoperability in the national payment system achieved is a qualitative indicator. This tracks milestones in the development of the NRPS. Interoperability is measured through 5 levels: 1) Theoretically interoperable; 2) Technically interoperable; 3) Functionally interoperable; 4) Interconnected; and, 5) Effectively interconnected as explained by the Alliance for Financial Inclusion (AFI). (c) The reason for the significant jump from baseline to year 1 is due to different data sources. Baseline figure is derived from the National Baseline Study on Financial Inclusion by the BSP with awareness and transparency rating on e-money and ATMs as a proxy to awareness and trust respectively. However, yearly targets are derived from the Philippine Household Survey on Payments that covers all types of electronic card instruments (ATM/debit cards, credit cards, pre-paid cards, and e-money cards). The approach done by the payments study is a more reliable basis for target setting due to slightly different method used in the baseline study by the BSP. The payments study asked more direct questions on awareness and trust unlike the BSP financial inclusion study that uses only e-money as a proxy for awareness. (d) For E-PESO, e-payment targets refer to electronic card instruments used for e-payments. These instruments include credit cards, ATM/debit cards, pre-paid cards and e-money cards issued by banks and non-bank e-money issuers. * Proposed changes to targets. ** Year 3 to LOP targets for Indicator 3.6b exceeded. Changes proposed adjusting to higher targets. Indicator 3.1 looks at the laws, circulars, regulations, and ordinances enacted to support e-payment growth. Often, there are public-private dialogues supporting efforts to introduce such rules and


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regulations. For Quarter 2, E-PESO shared the strategic relevance of the NRPS during a public dialogue at the “Future of Commerce: Philippines Meetup” event on February 23, 2017. Additionally, to broaden and increase competition among m-money and e-payment platforms, Indicator 3.2 refers to the number of policies removed or added that reduce barriers and encourage competition in e-payments. In collaboration with the BSP, policies that foster competition shall be identified. Indicator 3.3 (interoperability in the NRPS achieved) is a qualitative indicator. This tracks milestones in the development of the NRPS. Interoperability is measured through five levels: 1) theoretically interoperable; 2) technically interoperable; 3) functionally interoperable; 4) interconnected; and, 5) effectively interconnected, as explained by the Alliance for Financial Inclusion (AFI). During Quarter 2, E-PESO supported the BSP, the banks, and the payments industry in forming rules and policies to establish the real-time EFT ACH and the batch EFT ACH and in setting the agenda towards eliminating consumer barriers to adoption of upcoming e-payment instruments. This involved the necessary step of assisting in the formation of the Payment System Management Body (PSMB) where the rules for the payment system will be formed and managed and the establishment of the priority ACHs – Batch EFT (PESO Net) and Real-Time Low Value Push (InstaPay).

Indicator 3.4 (increased consumer awareness and trust in e-payments) shows only annual targets since the method to track the indicator is through surveys conducted by E-PESO once every two years. Indicators 3.5 and 3.6 refer to milestones on guidelines, fora, and articles of a cross-cutting nature that revolve around digital security, consumer protection, and knowledge sharing of best practices. Activities related to these indicators seek to inform and support regulators, industry players, and the general public on the latest trends on e-payments. In Quarter 2, a social media campaign was implemented to entice the public to use e-payment services of Quezon City and Cagayan de Oro City.

Component 4: E-payment ecosystem developed in key cities identified under USAID’s CDI


Year 2 Actual



Quarter


Quarter



2.2.3 Local Government and Decentralization(a) 2.2.3-5 Number of sub-national entities receiving USG assistance that improve their performance, New Cumulative

3 3

3 9

1 7

0 6

0 6

-- 100%

GNDR Gender(b) GNDR-2 Percentage of female participants in USG-assisted programs designed to increase access to productive economic resources (assets, credit, income or employment, For the year Cumulative as of the year

85% 85%

72% 73%

50% 50%

-- --

72% 73%

n/a n/a


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PPP Public/Private Partnerships(c) PPP3 Number of organizations (for and not-for-profit, and government) that have applied new technologies and/or management practices due to USG-supported Public-Private Partnerships (PPPs),

New Cumulative

8 8

5 13

2 15

0 13

0 13

0% 100%

Notes: (a) This standard ‘F’ indicator measures engagement by E-PESO of sub-national entities such as local government units. This corresponds to custom indicator “Indicator 1.2: Adoption of m-money and e-payments in all cities of PFG CDI and other cities/municipalities.” (b) As part of its contract, E-PESO also measures gender impact of the Activity. This indicator measures E-PESO impact on equitable access to productive economic resources through training and similar programs for both men and women. (c) This indicator corresponds to the sum of government and private sector partners that have applied new technologies or management practices as a result of E-PESO supported PPP activities. This is derived from custom indicators “Indicator 1.1: Adoption of new e-payment services as collection/disbursement option in five (5) national GPH agencies”, “Indicator 1.2: Adoption of m-money and e-payments in all cities of PFG CDI and other cities/municipalities, Number of CDIs (and other cities/municipalities) that introduced or enhanced m-money and e-payment options”, and “Indicator 1.3: New e-payment implementation and adoption by 500 (small, medium, and large) businesses.” Overall, efforts by USAID E-PESO to support the adoption of e-payments have not only been far reaching, but also cross-cutting in the areas of transparency, public-private partnership, financial inclusion, and gender. For example, working with LGUs such as Cagayan de Oro City led to financial literacy training workshops to mostly women cooperative members during March 2017. This allowed users to understand simplified and more accessible financial products and payment services, enabling financial inclusion, and a more equitable gender access to financial services. As of Quarter 2, E-PESO has trained more than 9,100 users of whom 73% are women. This figure does not yet include the tens of thousands of users already transacting electronically.

2.2 Implementation Status

Component 1: Rapid Adoption of E-payments in Financial Systems

Department of Transportation (DOTr)

USAID E-PESO met with representatives of the DOTr to explore a partnership in implementing e-payments. Although there is currently an Automated Fare Collection System (AFCS) provider for the public transport light rail lines, DOTr is looking to expand the use of e-payment, specifically contactless payment, to other transport modes such as buses, taxis, and even jeepneys. Unlike the AFCS being implemented in the train lines, DOTr envisions a system where ideally all types of contactless payment cards from different issuers are accepted. The DOTr cited several reasons why they want to implement the AFCS throughout all modes of transportation:

1. Enable the DOTr to properly gather ridership data and services available versus total number of riders.

2. Improve efficiency. In Seoul, South Korea, operators experienced a 17% increase in revenues when they switched to AFCS.


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3. Enable the DOTr to implement a single base fare scheme even for intermodal riders (eg. switch from rail to bus will only have base fare), thereby reducing travel expenses of riders. The single base fare scheme will also entail the need for some sort of “clearing house” that will compute fare revenue of each leg operator based on distance travelled by the commuter for the whole trip.

This initiative is also in line with the DOTr’s Road-Based Public Utility Vehicle Modernization Program, which aims to improve not only the vehicles’ safety standards, but improve payment mode as well. DOTr is currently looking for technical standards that ensure all contactless cards can be accommodated in the system.

As a next step, E-PESO shall set meetings between DOTr representatives and BSP to discuss the NRPS and how DOTr’s requirement for a transport clearing house may fit in the NRPS model.

Department of Finance (DOF)

E-PESO and BSP also presented the E-PESO Activity to the DOF, particularly USAID’s support to the NRPS and other government agencies. E-PESO is currently collaborating with the DOF and the BIR regarding clearer directions on the issuances of electronic invoices, electronic official receipts, and electronic withholding tax certificates.

Philhealth and Pag-ibig Fund

E-PESO has been participating in on-going talks with government owned and controlled corporations such as Philhealth and the Home Development Mutual Fund (or Pag-ibig Fund) for adoption of e-payments in their disbursement and collection activities. A memorandum of understanding is under review by Philhealth and currently under discussion with Pag-ibig.

Component 2: Infrastructure for E-payments Expanded

Due to the gap in time in which E-PESO has not had a Component 2 Lead, there were no major Component 2 activities in Quarter 2. However despite the manpower shortage, other members of the E-PESO team continued existing infrastructure initiatives in collaboration with partners such as Zamboanga City LGU.

The City Government of Zamboanga, led by Mayor Maria Isabelle Climaco-Salazar, with support from E-PESO, launched its e-payment system in March 2017. The system enables real property owners to pay taxes online using the city’s website through any Visa branded prepaid, debit and credit cards. An actual payment using the system was done by Zamboanga City’s IT head to demonstrate the convenience and simplicity of completing tax payments.

Aside from implementing online payments, the city government has shifted disbursements of allowances and incentives of its public school, police, jail, fire department, barangay intelligence network, and health personnel, scholars and volunteers, from cash to electronic using prepaid cards. This shift will eliminate long queues at the City Treasurer’s Office and provide recipients with a card they can use for cashless payments of bills and goods or to withdraw cash. Mayor Climaco-Salazar expressed appreciation for the support provided by USAID Philippines through its E-PESO Activity in enhancing the city’s e-payment system. A financial literacy workshop is being planned by USAID E-PESO to target recipients of the prepaid cards by the next quarter.


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Component 3: Enabling Environment for E-payments Improved Banks, e-money issuers meet for the first time to begin work on the national retail payment system’s priority ACHs Representatives from 20 financial institutions, including commercial banks, rural and thrift banks, and e-money issuers, participated in the kick-off meeting for the priority ACH working groups as part of the initiative to implement the NRPS. BSP hosted the meeting on February 3, 2017 at its Manila headquarters, and Deputy Governor (DG) Nestor A. Espenilla, Jr. opened the meeting and emphasized NRPS principles and BSP’s expectations from the industry.

Photos: (Top) BSP Deputy Governor Nestor Espenilla Jr. explains the principles of the National Retail Payment System. (Bottom) BSP’s Raymond Estioko discusses the concepts behind the priority ACHs and deliverables expected from the industry. As a next step, the industry representatives who attended the event will compose the working groups for two priority ACHs, namely, Batch EFT ACH and InstaPay ACH for low time real value push. The NRPS Core Team Lead, Mr. Raymond Estioko, discussed the expected deliverables from the working groups and detailed the prospective BSP policies that support the NRPS. He also provided the working group participants with a refresher on key ACH concepts.


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Financial institutions sign two landmark agreements to raise the share of e-payments in the Philippines

Photos: (Top) The payments industry representatives presented to BSP Governor Amando Tetangco and BSP Deputy Governor Nestor Espenilla, Jr. the signed agreements to establish the Payment System Management Body and two automated clearing houses. (Bottom) BSP’s Governor Tetangco, the Monetary Board, Deputy Governor Nestor Espenilla, Deputy Governor Maria Almasara Cyd N. Tuaño-Amador with members of the working groups for the two clearing houses to be set up, PESO Net and InstaPay. The BSP and Philippine financial institutions, with support from USAID E-PESO, marked two important milestones to jumpstart the implementation of the NRPS aimed at moving financial transactions away


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from cash and checks to digital payments. In a ceremony on March 31, 2017 at the BSP headquarters, 70 institutions composed of universal and commercial banks, thrift banks, rural banks and non-bank electronic money issuers signed a charter to establish the PSMB and a formal expression of intent to set up two priority automated clearing agreements. One clearing house, called “PESO Net”, will process electronic fund transfers by batches, within the same day, ideal for government transactions and budget disbursements. The other clearing agreement, “InstaPay”, will process real-time credit for low value digital transactions immediately, which is ideal for small transactions in shops and other merchants. Both clearing agreements are expected to be launched by the third quarter of calendar year 2017. Once established, the clearing agreements will make digital payments available in country for the first time -- cutting the funds transfer time (from a payer to a payee) from three days to one day for checks. This will ensure more efficient payments of taxes, payroll, government disbursements, retail transactions, domestic remittances, etc. E-payments will also improve the Philippine government’s oversight of domestic money flows, improve its ability to enforce tax regulations, and curb fraud and other illicit activities such as drug crime and terrorist financing, both top bilateral priorities of the US and Philippine governments. The establishment of the NRPS governing body and the two priority clearing houses will support the Philippine government’s goal of transforming the payments system and raising the share of e-payments from the current 1% to 20% by 2020. This spurs broader e-payment usage leading to increased access to financial services for 69% of Filipinos who remain unbanked. ADB estimates that the cumulative effect of digitally driven acceleration in financial inclusion could boost GDP growth by 2% to 3% in the Philippines, which at 2015 GDP value is estimated at US$9 billion. Component 4: E-payment ecosystem developed in key cities identified under USAID’s CDI Quezon City LGU Advocated for E-payments of Property and Business Taxes

Photos: (Left) The GCash (mobile money) payment provider’s booth invited Quezon City taxpayers to sign up for GCash accounts and pay taxes more efficiently using their cellphones. (Right) Jocelyn Alejo, a condominium unit owner, easily paid for her real property taxes online through Land Bank, enabling her to avoid a line of hundreds of taxpayers that were queued up to pay in cash.


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With support from E-PESO, the Quezon City LGU advocated the use of e-payments to taxpayers by hosting a weeklong “e-Bayad Tour” from January 16 to 20, 2017. The city invited its e-payment service partners, Land Bank of the Philippines and Mynt (GCash), to set up demonstration booths, in the payment area of city hall, encouraging taxpayers to opt out of long lines and pay their property and business taxes electronically instead of using cash. Data provided by GCash in the first few days following the e-Bayad Tour showed an increase in property tax payments made using GCash and more than 200 new mobile money accounts opened, and growing.

E-PESO is supporting the local government of Quezon City to improve and expand its e-payment system for government fees. The city offers mobile payments through GCash and online payments through Land Bank. Approximately PhP1,000,000 in taxes was paid using mobile payments following last year’s e-Bayad Tour, which was also held with support from USAID.

On-going Collaborations During Quarter 2, E-PESO continued to work with the Iloilo City LGU to launch online payments for business permits using Visa-branded credit cards and deploying a Bancnet system. In addition, by working with Mynt, the Quezon City LGU is studying the results of the Facebook social media campaign for RPT payments implemented through mobile phones. Initial results show that for the PHP2,500 budget, the ad was viewed 85,000 times and clicked around 3,000 times, and the user was redirected to the landing page on Quezon City’s official website, which shows step-by-step instructions and frequently asked questions for mobile tax payments. To complement the digital marketing campaign, E-PESO facilitated the set-up of Mynt's booth by the QC payments lounge, where front line staff can assist tax payers who want to pay via mobile phone. IN PICTURES: Zamboanga City launches online payment system for property taxes

Photo: Zamboanga City Mayor Beng Climaco-Salazar (third from left), USAID/ Philippines Office of Economic Development and Governance Head Jeff Lehrer (fourth from left), Development Bank of the Philippines Vice President Jun Bandal (second from right), USAID/Philippines Program Management Specialist Ma. Teresita Espenilla (second from left), USAID E-PESO staff, other local government officials and prepaid card recipients (back row) celebrated the official launching of the city’s online payment system.


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Photo: Teams from both USAID/Philippines and USAID E-PESO met with Mayor Climaco-Salazar.

2.3 Implementation Challenges

Component 1: Rapid Adoption of E-Payments in Financial Systems There is limited capability of government payment providers to deliver on scope and on time the e-payment requirements of partner government agencies. Currently, only Authorized Government Depository Banks (AGDB) are allowed to keep the funds of government agencies to the exclusion of the private sector. However, most government agencies do not provide helpful feedback on the capability of their AGDB in implementing e-payments. This has caused delays in the development time of e-payments for such government agencies.

Online merchants also face quite a number of other challenges in growing their e-payment acceptance. While internet-based merchants are typically good starting points for accepting e-payments, some are convinced that their market still prefers cash; and hence, these online resellers are forced to accept cash. Lazada Philippines, for instance, an internet-based retailer that controls 85% of the e-commerce retail market, has shared that 85% of their sales is still done through cash-on-delivery. They have cited several reasons for this:

• There are still very few credit card holders, making them a very small target market for online retailers.

• ATM debit cards present challenges for online purchases, as a majority cannot make online purchases.

• There is no perceived convenience derived from other forms of e-payment from the viewpoint of the user. M-money, prepaid cards, and other forms of e-money that require a cash-in still involves a cash payment. The added layer of cashing-in just adds an inconvenience to the user without really eliminating the use of cash.

• Online resellers face difficulty in getting the necessary permits for e-invoices, e-receipts, and e-withholding tax certificates. Lazada submitted their application to the BIR for issuing e-receipts two years ago and has not yet received the approval.


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• Customers still find the cash-on-delivery mode the safest and most hassle-free arrangement. If the item delivered is not satisfactory, they can simply refuse to pay. They do not have to go through the process of requesting a refund or reversal had they settled through e-payment.

• Merchants also face a high merchant discount rate from credit card acquirers for online transactions. Cash payments do not entail cash flow issues unlike credit card collections which have settlement schedules to follow.

In addition, some enterprises, such as electric cooperatives, do not find strong business incentives to modernize their IT capabilities in general, and e-payments in particular. For them, the cost-benefit advantage of automating their processes is unclear. This is a consistent behavior among monopolies where cost reduction and customer service quality may not be among the top priorities as their costs may be passed onto consumers who cannot select another service provider as they do not exist. However, utility companies are among the best opportunities for encouraging e-payment adoption by consumers because their services are regular, non-discretionary needs.

Lastly, there were delays in completing some agreements with target government agencies due to very long approval processes for the memorandum of understanding (MOU). E-PESO is on the seventh month of MOU finalization with PhilHealth.

Component 2: Infrastructure for E-payments Expanded One of the key challenges in e-payment adoption for government and businesses has been the lack of automated core business systems that can readily integrate with e-payment platforms. Other challenges to infrastructure expansion in e-payments include poor connectivity, relatively high-cost of transaction devices, and inadequate back-end systems to accept and track payment transactions. Nevertheless, working with channel managers of agent networks and enabling them with mobile phones and mobile point of service (POS) devices can expand the reach of e-payments to more areas of the Philippines previously unreached or under-reached. Component 3: Enabling Environment for E-payments Improved In discussions with the banking industry, the BSP wants to ensure there is a common body that will establish the rules for access and clearing but allow financial institutions to continue to compete with each other on the basis of their markets and products. The commercial banks prefer that governance of the payment systems continue to be bundled with the ownership of clearing switch operators (instead of segregating the functions as prescribed by the BSP). This position was expressed by recommendations to the BSP on alternative governance models to consider. For the thrift and rural banks however, they are very emphatic on wanting to have more seats in the PSMB Board despite very limited clearing volume contribution.

On the other hand, there is continued resistance to changing current practices and ways of conducting clearing rules prompting some political decisions to manage the transition. These included: the appointment of BancNet as InstaPay’s Clearing Switch Operator (CSO) even if Philippine Clearing House Corporation (PCHC) was technically qualified to perform such a function, the appointment of the BancNet operations committee members as the InstaPay ACH Working Group, and the assignment of BancNet and PCHC representatives as the secretariat of the ACH working groups.

There was also continued resistance from some of the banks on BSP’s policy on the ‘sender only pays’ provision specified in Circular No. 928, which no longer allows the practice of deducting fees from


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the payee’s account for domestic remittances. This was manifested through suggestions made during ACH working group discussions, thus prompting BSP to provide further clarifications.

The NRPS team also encountered difficulties providing recommendations on identified policies and circulars due to minimal legal foundation, thus delaying development or approval of such policies or circulars. Until the National Payment Systems Act has been passed by the Philippine Congress, BSP has limited legal foundation. However, E-PESO continues to assist the BSP in identifying the necessary regulations and giving inputs for consideration. Most of the identified policies or circulars that need to be issued should be consistent with NRPS principles and objectives. However, this affects multiple units, departments and/or groups within the BSP, thus necessitating more consultations and review with these units, which in turn contributes to the overall lengthening of turnaround time for circular issuance.

Lastly, on government disbursements, current BSP discussion partners at the DBM and DOF expressed concerns over the principle that the sender or payer must shoulder the cost for the e-payment. Such principle is in conflict with the current disbursement practice that any related costs are passed on to the beneficiary.

Component 4: E-Payment ecosystem developed in key cities identified under USAID’s CDI LGU partners with e-money collection services for government fees all report low usage and adoption rates. Consultation with the respective LGU teams point to lack of awareness of existing e-payment options among end users. The seasonal nature of government transactions is another factor contributing to the slow adoption of existing e-payment options. Field visits revealed that payment of local taxes or permits do not occur frequently within a year, thus making it difficult to nurture familiarity and confidence in the payment channels. LGUs may be influential and have the power to convene others to use e-payment services; however, when the services remain unused by the broader payment ecosystem (i.e., the private sector and businesses, utility companies, etc.) uptake and usage of e-payment options for infrequent LGU collections will most likely be limited. Payments for local government taxes and fees have increased only from January to March of each year, which is the usual tax payment season. During Quarter 2, E-PESO conducted two runs of the eBayad Tour in Quezon City (January and March 2017, for business taxes and RPT, respectively) and a social media campaign in both Quezon City and Valenzuela City. Due to the campaign, customer adoption and usage, though still low, has begun to rise. For instance, mobile transactions increased by PHP289,000 (PHP1,781,942 from the 2016 volume of PHP1,492,785), but this only accounts for 0.1% (less than 1%) of Quezon City’s total RPT transactions. Clearly, campaigns to promote the service needs to be refined. The efforts of the LGU in promoting the services via existing touch points – social media accounts, alerts, mailers, flyers, posters, announcements during recurring events (e.g. general assemblies, ceremonies etc.) – can be complemented with existing marketing efforts of the service provider through existing touch points, such as CICOs, frontliners (especially personnel who handle account openings), alerts, mailers, flyers, and posters. Collective effort via existing touch points is not only cost effective, as this requires very minimal marketing investment, it is also sustainable and continuous.


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Lastly, E-PESO needs to ramp up its travel and meetings with LGUs. A lack of local coordinators and infrequent visits requires frequent re-introductions and long-distance follow-ups of tasks and requests, which take time and extra effort.

2.4 PMP Update

During Quarter 2, E-PESO continued to discuss with USAID proposed changes to the M&E Plan and Year 3 Work Plan in light of reduced budget allocations. On March 1, 2017, the USAID CO sent approval on the indicator changes with the understanding that such proposed changes shall be reflected through amendments to the workplan.


Year 2 Actual

Year 3 Target

Current LOP Target

Proposed New LOP Target

Indicator DP 1: E-payments accounting for at least 20% of all retail payment transactions, Percent of e-payments accounting for retail payment transactions

1.03%

2.76%

3.42%

20.0%

10.0%

Indicator 1.2: Adoption of m-money and e-payments in all cities of PFG CDI and other cities/municipalities, Number of CDIs (and other cities/municipalities) that introduced or enhanced m-money and e-payment options, New Cumulative

33

36

410

32

10Indicator 1.3: New e-payment implementation and adoption by 500 (small, medium, and large) businesses, Number of businesses introducing or enhancing e-payment options as a result of E-PESO support, New Cumulative

44

15

95100

500

300

Indicator 1.4: Over 25,000 people trained (via consumer education) on the uses of e-payments and m-money services for improved household financial management, Number of people trained (via consumer education) on the uses of e-payments, New Cumulative

272272

8,8769,148

2,85212,000

20,000

16,000DesiredOutcome2:InfrastructureforE-PaymentsExpanded

Indicator 2.1: Growth of front-end e-payment infrastructure expanded,


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Number of institutions supported by E-PESO to improve and/or expand their front-end infrastructure, New Cumulative

1010

818

523

50

30

Indicator 2.2: Back-end e-payment infrastructure strengthened, Number of institutions supported by E-PESO to improve and/or expand their back-end infrastructure, New Cumulative

1010

515

520

50

30Indicator 3.1: Financial regulation refined to manage growth of e-payments, Number of circulars, regulations, and/or local ordinances refined or clarified to support e-payment growth,

New Cumulative

22

57

310

30

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With funding cuts, E-PESO will not be able to conduct a full market research/assessment for Year 3, interventions with some private sector partners will be foregone, and product development by many financial institutions may be delayed. With reduced funding, E-PESO cannot:

1. Fully staff and undertake necessary trips; 2. Hire most consultants; 3. Provide the same level of commodity support to partners; and, 4. Sponsor study visits to hasten policy reforms.

This has a domino effect on LOP targets. For example, Indicator 1.3 is reduced to 300 due to significant reduction in budget affecting support activities to address the indicator. These activities require a level of scale that are cost intensive due to manpower and material support, thus translating to:

1. Significantly reduced trips outside of Metro Manila; 2. Removal of marketing support budget for partners, limiting interventions to technical

assistance; and, 3. Hiring freeze of additional regional personnel as area coordinators.

However, the following indicators are being considered for Year 3 due to better policy clarity from the BSP and other government partners and after discussions with the Mission:


Year 2 Actual

Year 3 Target

Current LOP Target

Proposed New LOP Target

DesiredOutcome3:EnablingEnvironmentforE-PaymentsImprovedIndicator 3.2: Increased competition among m-money and e-payment platforms,


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Number of policies removed or added to reduce barriers and encourage competition,(a) New Cumulative

00

00

11

5

5

Indicator 3.3: Interoperability in the national payment system achieved, (b) Level of Interoperability Batch EFT Real Time EFT (InstaPay)

00

41

21

44

44

Notes: (a) Increased competition among m-money and e-payment platforms is a contextual indicator. This refers to the number of policies removed or added to reduce barriers and encourage competition in e-payments. In collaboration with the BSP, targets shall be determined after identifying policies that foster competition or reduce barriers to competition. (b) Interoperability in the national payment system achieved is an indicator based on qualitative research. This tracks milestones in the development of the NRPS as measured through 5 levels: 1) Theoretically interoperable; 2) Technically interoperable; 3) Functionally interoperable; 4) Interconnected; and, 5) Effectively interconnected as explained by the Alliance for Financial Inclusion (AFI). By Year 3, interoperability scores shall be disaggregated by use case (Batch EFT and Real-time EFT) to track various e-payment modes. In addition to the above custom indicators, E-PESO continues to track the standard indicators below, including two new ones, for reporting and linking to the overall Country Development Cooperation Strategy (CDCS) of the Mission and to overall development efforts of the USG.

Standard Indicators Year 2 Actual

Year 3 Target LOP Target

GNDR Gender GNDR-2 Percentage of female participants in USG-assisted programs designed to increase access to productive economic resources (assets, credit, income or employment), For the year Cumulative as of the year

72%73%

50%50%

50%PPP Public/Private Partnerships PPP3 Number of organizations (for and not-for-profit, and government) that have applied new technologies and/or management practices due to USG-supported Public-Private Partnerships (PPPs),

New Cumulative

913

720

30 Due to changes to the above indicators, E-PESO updated and submitted the revised Year 3 Work Plan to USAID and the updated M&E Plan.


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3. INTEGRATION OF CROSSCUTTING ISSUES AND USAID FORWARD PRIORITIES

3.1 Gender Equality and Female Empowerment

Cooperative members affected by flood receive prepaid cards and financial literacy training

Photo: USAID E-PESO Research Associate Claude Cellan led a short seminar on financial management and safe and proper use of Omnipay prepaid cards to be issued to mostly women FICCO members affected by the flooding in Cagayan de Oro City.

With support from Mindanao’s leading cooperative, First Community Cooperative (FICCO), E-PESO trained 64 FICCO members, mostly women, who were most affected by the recent flash floods in Cagayan de Oro City on financial literacy and benefits of electronic payments. The training was held on February 2 at the FICCO Tiano Branch in Cagayan de Oro City and covered techniques and tips on managing money, ensuring secured financial transactions, and proper usage of prepaid cards. The members were given preloaded Omnipay Prepaid Cards to allow them to be familiar with card features and encourage e-payment usage.

3.2 Policy and Governance Support

E-PESO activities in the payments industry have been challenging due to behavioral biases and inefficient market practices built in the Philippines through the decades. However, E-PESO’s work on helping the GPH shift its payments streams to e-payments has been boosted by more supportive bureaucrats, faster project implementation, and quicker issuance of needed policy changes.


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Support for BSP Despite the challenges, BSP is able to secure emerging banking industry support for the NRPS. E-PESO also continues to assist the BSP in organizing public-private dialogues and help the BSP’s NRPS technical working group tasked with developing the rationale, framework, and policies supporting e-payments in the Philippines. Working through the PSMB Project Management Office (PMO), the BSP provided significant inputs in the formulation of the PSMB Charter and Terms of Reference and establishment of the priority ACHs – real-time low value credit (InstaPay) and batch EFT (PESO Net). These were in the form of the provision of reference documents, conduct of presentations, participation in working group meetings and dialogues, provision of clarifications to issues, concerns and draft documentation prepared by the PSMB PMO and the working groups. To support the settlement risk management for retail payments, the BSP has also initiated the development of a security guarantee mechanism, a facility within BSP to ensure that a participant’s obligations are settled with certainty and finality. Additionally, E-PESO provided BSP with inputs and reference documents shared with the industry, assisted in making the necessary clarifications to issues and concerns raised, conducted some of the presentations to brief industry participants on the NRPS, coordinated with other resource persons to facilitate understanding of objectives. Likewise, the NRPS Core Team has obtained Monetary Board Approval (MB Resolution No. 914) last March 9, 2017. Although the approval document is not available to the public nor with E-PESO, the general action items recommended were:

• Confirmation of the NRPS Framework; • Issuance of NRPS-Related Policies; • Creation of an Ad-Hoc Committee for the Operationalization of the Settlement Guarantee

Mechanism (SGM); • Coordination with the Human Resource Development Department (HRDD) to study the

creation of a dedicated BSP Office for oversight of the payments system; and, • Development of appropriate policies.

The NRPS-related policies are included below. Regulatory requirements in the form of BSP circulars will be formulated on the basis of these approved policy directives:

• Amendment of Electronic Banking Regulation - o Participants to make Electronic Fund Transfer (EFT) service available in all their

electronic delivery channels o Timely credit to account of payee �

• Operationalize Settlement Guarantee Mechanism - o More frequent clearing/settlement o Establishment of Settlement Guarantee Account with BSP o Irrevocability of transaction �

• Promote Consumer Protection - o Payee/beneficiary must receive the amount in full o Transparency and Disclosure of Policies and Fees �


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3.3 Public Private Partnerships

Besides individual agencies of government and businesses, E-PESO is building an e-payments ecosystem with private sector partners and LGUs to push for greater adoption of e-payments at the mass user level and demonstrate models to be followed. E-payments for property taxes promoted to condominium owners in Quezon City

Photo: A homeowner inquires about doing real property tax payment using GCash mobile money at the e-payments caravan held at Grass Residences in Quezon City. Taxpayers and unit owners from two condominium developments in Quezon City were introduced to the convenient option of paying RPT using e-payment channels. The city government of Quezon City, supported by E-PESO, hosted simultaneous promotional caravans at Robinsons Land’s Escalades and SM Development Corporation’s Grass Residences on March 18 and 19, 2017 to encourage RPT payers to beat the March 31 payment deadline by paying online or through a mobile money account. Quezon City currently offers online payments via Land Bank of the Philippines debit card or select BancNet affiliated cards, and mobile payments using GCash. The caravans featured booths wherein interested homeowners could inquire about the steps in completing an RPT payment via mobile and


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online, register for GCash mobile money accounts, and make cash-in transactions on their mobile wallet.

4. STAKEHOLDER PARTICIPATION AND INVOLVEMENT

Demonstrating the increasing acceptance on the advantages and benefits of e-payments, E-PESO witnessed active stakeholder participation and involvement in its activities in Quarter 2. One highlight is the Quezon City Local Government’s Business Permits and Licensing Office, which opened a “One-Stop-Shop Business Registration” facility that streamlines the process for business owners to register their businesses and payment fees. The facility has a business registration kiosk that incorporates seven different national government requirements and provides a new option to pay the registration fees with e-payments using BancNet debit cards or GCash m-money service – making it more efficient for businesses to legally operate and the local government to regulate businesses and recover fees. Additional services for entrepreneurs such as financing (via Globe Fuse) and e-commerce solutions (via Globe myBusiness) are available at the one-stop-shop. Another example is the lead taken by the BSP in organizing consultation meetings and preparing for the NRPS signing ceremonies. Various departments of the BSP, including key units such as the NRPS core team and IFAS, provided policy guidance and manpower to enable public-private dialogues with banks and EMIs as well as engage stakeholders from the broader community such as the national government.

5. MANAGEMENT AND ADMINISTRATIVE ISSUES The E-PESO Activity received its Year 3 obligation just before the start of Quarter 2, and immediately began scaling up technical activities. The annual work plan was adjusted and submitted to the COR for review and approval that is aligned with funding levels.

In terms of manpower, Component 4 Team Leader, Anatoly Gusto, resigned in late February. However, his replacement, Mr. George Parrilla, identified through a competitive recruit, was able to overlap with Mr. Gusto for one week prior to his departure, which allowed for an in-depth handover. Recruitment also began for a Philippines national deputy chief of party (DCOP) to take over for the current expatriate DCOP’s scheduled departure by June 2017.

E-PESO also implemented cost reduction methods including lessening the space of its Makati City office by 28 percent in February 2017, enabling more funds to go directly to technical activities.

Further, the contractual deliverable “Commodity Inventory and Tracking Report” was updated and submitted to the COR and CO on March 2017.


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6. LESSONS LEARNED In various events, E-PESO not only shared lessons, it also learned from fellow practitioners. This allowed participants to leverage their experiences and for E-PESO to understand the challenges faced in the field for e-payment adoption. Financial inclusion aspect of National Retail Payment System highlighted at industry forum

Photo: USAID E-PESO Chief of Party Mamerto Tangonan (second from left) shared about the role of the National Retail Payment System initiative in pushing greater financial inclusion in the Philippines during a panel discussion at the Future of Commerce: Philippines Meetup. E-PESO highlighted the ongoing efforts led by the BSP and the Philippines’ payments industry to move forward the NRPS at a forum attended by representatives from the banking, fintech, microfinance and development sectors on February 23, 2017 in Taguig City. Chief of Party Mamerto Tangonan joined a panel discussion at the Future of Commerce: Philippines Meetup, which also featured Innovations for Poverty Action Philippines Country Director Nassreena Sampaco-Baddiri and Mynt’s Head of Business Development James Aujero. The discussion focused on demonstrating how serving consumers at the bottom of the pyramid can make good business sense. E-PESO emphasized the potential of the NRPS in creating more opportunities for the country’s unbanked population to gain access to financial products and services.


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USAID E-PESO pushes e-payments initiatives in Iloilo City

Photo: USAID E-PESO E-Payment Ecosystem Advisor George Parilla shared the activities, updates and challenges of E-PESO Activity to representatives of other USAID projects working in Iloilo City. E-PESO participated in the Cities Development Initiative Meeting on March 9, 2017 in Iloilo City to share the project’s activities and other updates that support the city’s move to digitize payments. The meeting, organized by USAID Strengthening Urban Resilience for Growth with Equity (SURGE) Program, was attended by five other USAID projects, including Building Low Emission Alternatives to Develop Economic Resilience and Sustainability (B-LEADERS), Catalyzing Entrepreneurship Among Iloilo’s Ultrapoor Project (CEAIU), Advancing Philippine Competitiveness Project (COMPETE), Education Governance Effective Project (EdGE), and VisayasHealth. USAID E-PESO has been working with the Iloilo City government to expand its e-payment program, including implementing online payments for real property and business taxes by the second quarter of 2017. Lessons from the Staff In line with expanding e-payment transactions in the broader economy, E-PESO may require an external technical resource in evaluating the DOTr requirements involving the AFCS. The transport industry is a complicated subject that involves several stakeholders of differing interests. Therefore, there is a need to carefully evaluate the impact of the AFCS on each stakeholder as the e-payment options for public mass transport are rolled out. E-PESO may also need an external resource in evaluating the needs of the DBM in their requirement to expand user training on the Budget Treasury Management System (BTMS). It is currently being extended to the Bureau of Treasury and DBM, and DBM is looking to expand such training for other government agencies. On the other hand, working with the BSP has reaped more lessons during the course of implementing the NRPS, namely:


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• Dedicated resource from the industry – Despite the challenges encountered, the appointment of the properly dedicated resource by the banking industry acting as the PSMB Project Management Office (PMO) was instrumental in facilitating progress of the NRPS. Since the PMO was expected to deliver outputs, the lead person assigned by the industry made sure that most CEOs were engaged in discussions, and decisions were made to move the organization of the PSMB and the ACH Agreements;

• Dedicated resource from the BSP – There were more full-time members of the NRPS Core Team thus facilitating shorter turnaround time in creating and reviewing documents (particularly the Charter, Terms of Reference and agreements), and issuing or responding to clarifications;

• Provision of reference documents – BSP provided to the industry sample Terms of Reference, PSMB Charter, and ACH Agreements, and suggested clearing rules which were based on reference documents shared by the Payments Advisor or based on workshops and consultations with the Payments Advisor. These were used to expedite the formulation of such documents within the industry;

• Monetary Board Approval – Having a formal Monetary Board approval to refer to during the negotiations with the industry stakeholders helped facilitate getting agreement from the industry; and,

• Moral suasion exerted by the Governor – Target timetables were reduced when the Governor appealed during critical moments for an earlier completion of the formal incorporation of the PSMB.

Lastly, working in CDIs enabled E-PESO to realize the need to work with LGUs to develop a 3- or 6-month roadmap towards adoption of e-payment options. It needs detailed regular activities and follow-through engagements to ensure that working with the team is not discrete and discontinuous, but part of a holistic process. In particular, involving BPLS and RPT systems providers is crucial in the planning timetable and target-setting activity.

7. PLANNED ACTIVITIES FOR NEXT QUARTER INCLUDING UPCOMING EVENTS

For the next quarter, E-PESO will prioritize improving the enabling environment for e-payments (Component 3), supporting the adoption and growth of e-payments in the existing set of CDIs and other USAID partner LGUs (Component 4), and driving e-payment usage by national government agencies with large payment streams (Component 1). To achieve E-PESO’s objective of accelerating the shift to digital payments for broad-based economic growth, having an efficient, digital and interoperable financial market infrastructure is the foremost priority. E-PESO is thus focused on support to the BSP in implementing its NRPS plan and operationalizing the ACH agreements on batch EFT and low-value real-time credit push according to the principles embodied in the NRPS Framework. Since the signing of the PSMB Charter and Expression of Intent, E-PESO will support the BSP in guiding the payments industry to organize the governance structures and operating processes of the ACHs intended to self-regulate clearing operations according to the NRPS framework and promote consumer protection. BSP and E-PESO shall also assist the PSMB PMO in setting up its organization


33

and secretariat support to the ACHs as well as follow-through on BSP dialogues with government agencies to encourage electronic disbursements and collections Additionally, E-PESO will continue driving e-payment adoption and usage in the market through three approaches: (1) supporting national government agencies with large payment streams to switch disbursements to e-payment instruments and/or to expand e-payment collection options; (2) assisting business solutions providers (e.g. computerized accounting systems, payroll systems, school information systems, etc.) to integrate e-payments into their products for use by businesses; and, (3) building e-payment ecosystems in CDIs and other USAID partner cities (specifically Batangas, Iloilo, Cagayan de Oro, Puerto Princesa, Zamboanga, Tagbilaran, Quezon City, Valenzuela and Pulilan) in partnership with the LGUs, private sector, utility firms, agent networks and e-payment service providers. Work with Philhealth and HDMF (or Pag-Ibig Fund) is ongoing and the MOUs are currently being finalized. Together with service provider PayMaya, E-PESO continues to support the adoption of an additional payment channel for the BIR. E-PESO is also developing with the DoTr a preliminary business case for the AFCS in the planned Public Utility Vehicle Modernization Program. E-PESO is also set to launch the Land Bank of the Philippines’ electronic payment portal for the National Meat Inspection Service (NMIS), allowing NMIS clients to pay their dues online. Lastly, E-PESO will continue to assist LGUs in the technical set-up, integration testing, business process re-design, user acceptance testing, and drafting of manuals/implementing rules and regulations for e-payment adoption.

These approaches will be led by the E-PESO technical team experienced with payment technology, business development, operations management, change management, and training and research. E-PESO anticipates an average of two regional trips per month in addition to limited remote consumer financial education and promotion support. E-PESO will also continue to work with partner LGUs to increase usage of their existing e-payment solutions and integrate additional payment channels, in particular online and mobile payments, to provide additional alternatives for their constituents in paying local government taxes, permits and other fees. E-PESO will continue to support the expansion of vital agent networks by linking them into the e-payment ecosystem in partner cities. In anticipation of a more inclusive NRPS, E-PESO will support the participation of qualified smaller financial institutions in the payments system to enlarge the network of e-payment users and deliver digital payments even in rural areas. E-PESO will assist value-added service providers with the technology to link these smaller-scale institutions to payment clearing operators. The E-PESO technical team will also initiate work with payment innovators to develop sustainable low-tier merchant POS solutions and a more efficient bill payment solution using electronic bills presentment and payment. Lastly, with support from key partners, E-PESO will continue to build awareness and advocate for e-payments to the broader public through the ePay Pilipinas web portal and associate social media channels. The Activity will provide information products and conduct knowledge sharing activities that convey best practices and improve the capability of organizations and individuals to adopt e-payments. The activities proposed for the quarter reflect USAID’s guidance that E-PESO’s funding levels will be lower than originally anticipated.

USAID / E-PESO YEAR 1 ANNUAL REPORT 35

ANNEX 1: Press Coverage and Mentions

Year 3 Quarter 2 (January 1 – March 31, 2017) BSP set to launch new retail payments system The Manila Standard | March 8, 2017 http://thestandard.com.ph/business/banking-report/231260/bsp-set-to-launch-new-retail-payments-system.html BSP eyes two modes to boost NRPS implementation The Manila Bulletin | March 8, 2017 http://business.mb.com.ph/2017/03/08/bsp-eyes-two-modes-to-boost-nrps-implementation/ BSP eyes agreements with financial firms for NRPS Business World | March 9, 2017 http://www.bworldonline.com/content.php?section=Finance&title=bsp-eyes-agreements-with-financial-firms-for-nrps&id=141893 Media coverage of Zamboanga City Launch Zamboanga City gov’t, USAid, DBP, online tax payment Sunstar | March 28, 2017 http://www.sunstar.com.ph/zamboanga/local-news/2017/03/28/zamboanga-city-govt-usaid-dbp-online-tax-payment-533513 City gov’t completes online payment system Sunstar | March 25, 2017 http://www.sunstar.com.ph/zamboanga/local-news/2017/03/25/city-govt-completes-online-payment-system-533053 USAID, City launch online payment for real property tax Zamboanga Today | March 2017 http://www.zamboangatoday.ph/index.php/top-stories/21177-usaid-city-launch-online-payment-for-real-property-tax.html Media coverage of signing of PSMB Charter E-payments to spur faster economic growth – BSP The Manila Times | April 1, 2017 http://www.manilatimes.net/e-payments-spur-faster-economic-growth-bsp/320343/ ACHs to pave way for BSP’s retail e-payments The Manila Bulletin | April 1, 2017 http://business.mb.com.ph/2017/04/01/achs-to-pave-way-for-bsps-retail-e-payments/ Firms set up e-payments clearing houses Business World | April 1, 2017 http://www.bworldonline.com/content.php?section=Finance&title=firms-set-up-e-payments-clearing-houses&id=143107 BSP, banks establish shared clearing settlements system The Philippine Star | April 1, 2017


http://www.philstar.com/business/2017/04/01/1686396/bsp-banks-establish-shared-clearing-settlements-system Philippines to Establish Shared Clearing, Settlements System Regulation Asia | April 3, 2017 http://www.regulationasia.com/content/philippines-establish-shared-clearing-settlements-system


ANNEX 2: Summary of Results to Date by Key Indicator

Indicator DI 4: More predictable and reliable financial tools for the poor Number of financial tools developed for the poor Year 1 Quarter 4 (July – Sept 30, 2016)

- DSWD financial literacy tool and distribution of ATM/debit cards Indicator 1.1: Adoption of e-payment services as monetary transaction (collection/ disbursement) option in five (5) national GPH agencies Year 1 Quarter 4 (July 1 – Sept. 30, 2015)

- Department of Social Welfare and Development (DSWD) Year 2 Quarter 3 (Apr. 1 – June 30, 2016)

- Bureau of Internal Revenue (BIR) Indicator 1.2: Adoption of m-Money and e-payments in all cities of PFG CDI and other cities/municipalities No. of CDIs (and other cities/municipalities) that introduced or enhanced m-Money and e-payment options Year 1 Quarter 4 (July 1 – Sept. 30, 2015)

- Cagayan de Oro City - Pulilan, Bulacan - Zamboanga City

Year 2 Quarter 2 (Jan. 1 – Mar. 31, 2016) - Batangas City - Quezon City

Year 2 Quarter 4 (July 1 – Sept. 30, 2016) - Valenzuela City

Indicator 1.3: Increased e-payment implementation and adoption to 500 (small, medium, and large) businesses Number of businesses introducing or enhancing e-payment options as a result of E-PESO support Year 2 Quarter 1 (Oct. 1 – Dec. 31, 2015)

- Cagayan de Oro Electric Power & Light Company (CEPALCO) - Cagayan de Oro Water District (COWD) - Zamboanga City Water District (ZCWD) - Palawan Electric Cooperative (PALECO)

Year 2 Quarter 4 (July 1 – Sept. 30, 2016) - University of the Visayas (UV)

Indicator 1.4: Over 25,000 people trained (via financial education and literacy) on the uses of e-payments and m-Money services for improved household financial management Number of people trained (via financial education and literacy) on the uses of e-payments Year 1 Quarter 4 (July 1 – Sept. 30, 2015)

- DSWD – MCCT Davao del Norte (3 females) - NCR – MCCT Training QC, 7/24/15 (13 females, 1 male) - NCR – MCCT Training Manila, 8/8/15 (185 females, 18 males)


- E-payments Technology & Innovations for Business, Puerto Princesa City and local chambers of commerce, 9/29 – 9/30 (31 females, 21 males)

Year 2 Quarter 2 (Jan. 1 – Mar. 31, 2016)

- FICCO Training, 3/19/16 to 3/20/16 (# of males, #females; 8,846 trained) Indicator 2.1: Growth of front-end e-payment infrastructure expanded No. of institutions supported by E-PESO to improve and/or expand their front-end infrastructure Year 1 Quarter 4 (July 1 – Sept. 30, 2015)

- Cagayan de Oro City - Puerto Princesa City - Pulilan (Bulacan) - Zamboanga City - Cagayan de Oro Electric Power and Light Company (CEPALCO) - Cagayan de Oro Water District (COWD) - Palawan Electric Cooperative (PALECO) - Puerto Princesa Water District (PPWD) - Zamboanga City Water District (ZCWD) - Auto Top-Up Ventures Inc. (ATVI)


- Batangas City - Quezon City

Year 2, Quarter 3 (Apr. 1 – June 30, 2016) - OmniPay - Mynt

Year 2 Quarter 4 (July 1 – Sept. 30, 2016) - Valenzuela City - BIR - Mindanao University of Science & Technology (MUST) - University of the Visayas (UV)

Year 3 Quarter 1 (Oct. 1 – Dec. 31, 2016) - PayMaya

Indicator 2.2: Back-end e-payment infrastructure strengthened No. of institutions supported by E-PESO to improve and/or expand their back-end infrastructure Year 1 Quarter 4 (July 1 – Sept. 30, 2015)

- Cagayan de Oro City - Puerto Princesa City - Pulilan (Bulacan) - Zamboanga City - Cagayan de Oro Electric Power and Light Company (CEPALCO) - Cagayan de Oro Water District (COWD) - Palawan Electric Cooperative (PALECO) - Puerto Princesa Water District (PPWD) - Zamboanga City Water District (ZCWD) - Auto Top-Up Ventures Inc. (ATVI)


- Batangas City - Quezon City


Year 2 Quarter 4 (July 1 – Sept. 30, 2016)

- BIR - Mindanao University of Science & Technology (MUST) - University of the Visayas (UV)

Indicator 2.3. E-payment infrastructure gaps identified Number of gap analysis reports at industry or ecosystem level Year 2 Quarter 3 (Apr 1 – June 30, 2016)

- E-payments Landscape Year 2 Quarter 4 (July 1 – Sept 30, 2016)

- Philippine Individual Payments Baseline Survey - Philippine Agent Network Study

Indicator 3.1: Financial regulation refined to manage growth of e-payments a. No. of circulars, regulations, and/or local ordinances refined or clarified to support e-payment growth Year 1 Quarter 4 (July 1 – Sept. 30, 2015)

- Zamboanga City Council Resolution No. 1067 issued last Sept. 15, 2015 - Puerto Princesa Executive Order 15 Series 2015 issued last Sept. 21, 2015

Year 2 Quarter 1 (Oct. 1 – Dec. 31, 2015)

- 2016 National Expenditure Program, Section 76 (supports adoption and compliance to e-payments in all government transactions)

- Puerto Princesa City Council Ordinance passed last Dec. 2015 Year 2 Quarter 2 (Jan. 1 – Mar. 31, 2016)

- BIR Regulation 3-2016 issued last Mar. 23, 2016 Year 2 Quarter 4 (July 1 – Sept. 30, 2016)

- Joint Memorandum Circular 01-2016 issued last Aug. 30, 2016 - Tagbilaran City Executive Order 23 Series of 2016 issued last Sept. 21, 2016

Year 3, Quarter 1 (Oct. 1 – Dec. 31, 2016)

- Tagbilaran City Ordinance No. 21-16 issued Nov. 3, 2016 b. No. of public-private dialogues to support strengthening e-payment environment Year 1 Quarter 3 (Apr. 1 – June 30, 2015)

- NATCCO General Assembly (May 23-24, 2015)

Year 1 Quarter 4 (July 1 – Sept. 30, 2015) - Launch of the National Strategy for Financial Inclusion (July 1, 2015) - Dialogue of Queen Maxima and Philippine banking industry and other players (July 2015) - Microfinance Council of the Philippines Inc. (MCPI) Annual Conference (July 2015) - DILG Regional ICT Forum – Mindanao (Sept. 3, 2015) - DILG Regional ICT Forum – Luzon (Sept. 16, 2015) - DILG Regional ICT Forum – Visayas (Sept. 22, 2015) - Chief Information Officers Foundation Forum (Sept. 30, 2015)


- Philippine Agent Network Study Launch (Oct. 26, 2015)


- Remittance for Development Council Meeting (Nov. 6, 2015) - NEA-Electric Cooperatives Consultation Session (Nov. 26, 2015) - Launch of the NRPS (Dec. 9, 2015) - BSP-CEOs Conference Meetings (Dec. 2015)


- SURGE Stakeholder's Forum - Batangas City (Jan. 19, 2016) - SURGE Stakeholder’s Forum - Tagbilaran City (Jan. 26-27, 2016)

Year 2, Quarter 3 (Apr. 1 – June30, 2016)

- Innovative Strategies for Development Summit 2016 (June 8-10) - CDO MSME Business Forum, Cagayan de Oro City (June 10-11) - Impact of M-Money in the Bottom of the Pyramid Summit (June 17)

Year 3, Quarter 1 (Oct. 1 – Dec.31, 2016)

- Digital Congress: “The Power of X” organized by IMMAP (Oct. 12, 2016) - Information and Communications Technology (ICT) Forum organized by DILG (Oct. 27,

2016) Year 3, Quarter 2 (Jan. 1 – Mar. 31, 2017)

- BSP-Banking Industry Workshop on NRPS (Feb. 3, 2017) - Future of Commerce: Philippines Meetup (Feb. 23, 2017)

Indicator 3.5: Security measures in e-payments strengthened No. of guidelines developed and forums held that promote awareness on digital security best practices or consumer protection Year 2 Quarter 2 (Jan. 1 – Mar. 31, 2016)

- FICCO Training, 3/19/16 to 3/20/16 (2,455 of males, 6,421 females; 8,876 trained) Indicator 3.6: Global knowledge-sharing on e-payments promoted a. No. of articles promoting e-payments Year 1 (Mar. 18 – Sept. 30, 2016)

Philippines pushing for cashless society, but it’s a long way off Apr. 25, 2015 | techinasia.com https://www.techinasia.com/philippines-cashless-society/?utm_source=search&utm_medium=web&utm_campaign=%2Fphilippines-cashless-society%2F MVP pushes digital payments to fast-track financial inclusion in Philippines July 27, 2015 | The Philippine Star (philstar.com) http://www.philstar.com/business/2015/07/27/1481268/mvp-pushes-digital-payments-fast-track-financial-inclusion-philippines USAID, LGU to launch E-PESO activity Aug. 3, 2015 | Daily Zamboanga Times http://zamboangatimes.ph/top-news/15657-usaid-lgu-to-launch-e-peso-activity-.html Smart cites digital payment’s relevance Aug. 11, 2015 | The Daily Tribune http://www.tribune.net.ph/business/smart-cites-digital-payment-s-relevance


Prepaid cards for cash transfer distributed to street families, indigenous people, etc. Aug. 12, 2015 | philnews.com http://philnews.com/headlines/2015/headline_news_0813ag.htm More convenient: Prepaid cards distributed to CCT beneficiaries Aug. 13, 2015 | moveon.ph http://www.moveon.ph/more-convenient-prepaid-cards-distributed-to-cct-beneficiaries/

Beng, USAID launch e-PESO system in ZC Aug. 28, 2015 | Daily Zamboanga Times http://zamboangatimes.ph/top-news/15930-beng-usaid-launch-e-peso-system-in-zc.html Zambo, USAID launch E-PESO program Aug. 28, 2015 | Zimnet New http://www.zimnet.com/archives/1195-Zambo,-USAID-launch-E-Peso-program.html Zamboanga Mayor Beng Climaco lauded for dynamic leadership Aug. 28, 2015 | Mindanao Examiner http://mindanaoexaminer.com/zamboanga-mayor-beng-climaco-lauded-for-dynamic-leadership/ Program to help PH achieve 20-fold increase in e-payments Aug. 31, 2015 | Mindanao Times http://mindanaotimes.net/program-to-help-ph-achieve-20-fold-increase-in-e-payments/ USAID cites Zambo’s role as engine of growth Sept. 1, 2015 | Zamboanga Today Online http://www.zamboangatoday.ph/index.php/top-stories/20938-usaid-cites-zambos-role-as-engine-of-growth-.html USAID launches E-PESO project in Zambo Sept. 2, 2015 | pia.gov.ph (Philippine News Agency) http://news.pia.gov.ph/article/view/2831441184029/usaid-launches-e-peso-project-in-zambo ‘E-PESO Activity” in Zamboanga Sept. 22, 2015 | The Manila Times Online http://www.manilatimes.net/e-peso-activity-in-zamboanga/220104/ ULAP co-organizes conduct of LGU ICT FORUM Mindanao Leg in Cagayan de Oro City Sept. 2015 | ulap.net.ph http://ulap.net.ph/index.php/en/program-updates/news-updates/379-ulap-co-organizes-conduct-of-lgu-ict-forum-mindanao-leg-in-cagayan-de-oro-city-with-dilg-blgd-dost-icto-and-dti


Microsoft enters partnership to promote e-payment Oct. 22, 2015 http://www.tribune.net.ph/business/microsoft-enters-partnership-to-promote-e-payment USAID lauds PHL for improving e-payment infrastructure BusinessMirror, Nov. 18, 2015 http://www.businessmirror.com.ph/usaid-lauds-phl-for-improving-e-payment-infrastructure/


City gears for e-Peso project take-off Zamboanga Today Dec. 29, 2015 http://zamboangatoday.ph/index.php/top-stories/22054-city-gears-for-e-peso-project-take-off.html Zamboanga City set to launch e-Pesos project Sunstar Zamboanga Dec. 31, 2015 http://www.sunstar.com.ph/zamboanga/local-news/2015/12/31/zamboanga-city-set-launch-e-pesos-project-449526

Year 2 Quarter 2 (Jan 1 – Mar 31, 2016)

USAID to hold two-day caravan for market vendors Mindanao Daily News | Feb. 18, 2016 http://www.mindanaodailynews.com/usaid-to-hold-two-day-caravan-for-market-vendors/ USAID, CDO speed up market stall payment via e-Bayad Tour pia.gov.ph | Feb. 23, 2016 http://news.pia.gov.ph/article/view/2601456209389/usaid-cdo-speed-up-market-stall-payment-via-e-bayad-tour- M-money, other e-payment options featured at QC e-Bayad Tour caravan quezoncity.gov.ph | Mar. 2016 http://quezoncity.gov.ph/index.php/recent-news/1994-mobile-money-other-electronic-payment-options-featured-at-qc-e-bayad-tour-caravan

Year 2 Quarter 3 (Apr. 1 – June 30, 2016)

QC, USAID conduct e-Bayad Tour Caravan Philippine Information Agency | Apr. 7, 2016 http://news.pia.gov.ph/article/view/231459994344/qc-usaid-conduct-e-bayad-tour-caravan- BIR, GCash relaunch e-filing, payments tie-up The Manila Times | Apr. 12, 2016 http://www.manilatimes.net/bir-gcash-relaunch-e-filing-payments-tie-up/255703/ BIR, Globe relaunch mobile income tax payment system The Standard | Apr. 12, 2016 http://thestandard.com.ph/business/203492/bir-globe-relaunch-mobile-income-tax-payment-system.html BIR, Gcash relaunch first e-tax filing and payment system in PH Manila Bulletin | Apr. 13, 2016 http://www.mb.com.ph/bir-gcash-relaunch-first-e-tax-filing-and-payment-system-in-ph/ BIR, GCash relaunch first e-tax filing, payment system SunStar | Apr. 13, 2016 http://www.sunstar.com.ph/cebu/business/2016/04/13/bir-gcash-relaunch-first-e-tax-filing-payment-system-467732


Philippines’s tax bureau taps mobile payment tax collection Enterpriseinnovation.net | Apr. 19, 2016 http://www.enterpriseinnovation.net/article/philippines-tax-bureau-taps-mobile-payment-tax-collection-177741850

Globe's GCash adapted for tax payment Telecom Asia | Apr. 19, 2016 http://www.telecomasia.net/content/globes-gcash-adapted-tax-payment


2016 International Conference on Development: Oca, 6 Others Banner CDO Delegation To International Confab on Urban Development www.kagay-an.com | July11, 2016 http://www.kagay-an.com/2016-international-conference-urban-developmentoca6-banner-cdo-delegation-intl-confab-urban-development/ QC shares best practices in electronic payment at USAID international conference Philippine Information Agency | July 14, 2016 http://news.pia.gov.ph/article/view/231468403099/qc-shares-best-practices-in-electronic-payment-at-usaid-international-conference Digital Commerce Expo Set To Revolutionise the Philippines This September 6-7 Yahoo Finance | Aug. 17, 2016 http://finance.yahoo.com/news/digital-commerce-expo-set-revolutionise-020000870.html Digital Commerce Expo Set To Revolutionise the Philippines This September 6-7 Korea IT Times | Aug. 22, 2016 http://www.koreaittimes.com/story/61582/digital-commerce-expo-set-revolutionise-philippines-september-6-7 Advocates seek to boost e-payments growth by 2020 Rappler | Sept. 6, 2016 http://www.rappler.com/technology/features/145402-advocates-seek-epayments-growth-epay-pilipinas

Year 3, Quarter 2 (Jan. 1 – Mar. 31, 2017)

BSP set to launch new retail payments system The Manila Standard | Mar. 8, 2017 http://thestandard.com.ph/business/banking-report/231260/bsp-set-to-launch-new-retail-payments-system.html BSP eyes two modes to boost NRPS implementation The Manila Bulletin | Mar. 8, 2017 http://business.mb.com.ph/2017/03/08/bsp-eyes-two-modes-to-boost-nrps-implementation/ BSP eyes agreements with financial firms for NRPS Business World | Mar. 9, 2017 http://www.bworldonline.com/content.php?section=Finance&title=bsp-eyes-agreements-with-financial-firms-for-nrps&id=141893


Media coverage of signing of PSMB Charter E-payments to spur faster economic growth – BSP The Manila Times | Apr. 1, 2017 http://www.manilatimes.net/e-payments-spur-faster-economic-growth-bsp/320343/ ACHs to pave way for BSP’s retail e-payments The Manila Bulletin | Apr. 1, 2017 http://business.mb.com.ph/2017/04/01/achs-to-pave-way-for-bsps-retail-e-payments/ Firms set up e-payments clearing houses Business World | Apr. 1, 2017 http://www.bworldonline.com/content.php?section=Finance&title=firms-set-up-e-payments-clearing-houses&id=143107 BSP, banks establish shared clearing settlements system The Philippine Star | Apr. 1, 2017 http://www.philstar.com/business/2017/04/01/1686396/bsp-banks-establish-shared-clearing-settlements-system Philippines to Establish Shared Clearing, Settlements System Regulation Asia | April 3, 2017 http://www.regulationasia.com/content/philippines-establish-shared-clearing-settlements-system Media coverage of Zamboanga City launch Zamboanga City gov’t, USAid, DBP, online tax payment Sunstar | Mar. 28, 2017 http://www.sunstar.com.ph/zamboanga/local-news/2017/03/28/zamboanga-city-govt-usaid-dbp-online-tax-payment-533513 City gov’t completes online payment system Sunstar | Mar. 25, 2017 http://www.sunstar.com.ph/zamboanga/local-news/2017/03/25/city-govt-completes-online-payment-system-533053 USAID, City launch online payment for real property tax Zamboanga Today | Mar. 2017 http://www.zamboangatoday.ph/index.php/top-stories/21177-usaid-city-launch-online-payment-for-real-property-tax.html

b. No. of global knowledge-sharing events that highlight the Philippines e-payment environment/players Year 1 Quarter 4 (July 1 – Sept. 30, 2015)

- Cards & Payments Philippines 2015, Manila, Philippines (Sept. 2-3, 2015) - G-20 Responsible Finance Forum, Istanbul, Turkey (Sept. 2015)


- Mondato Summit Asia, Manila, Philippines (Oct. 20-22, 2015) - Financial Times - Citibank Asia Pacific Financial Inclusion Summit, Manila, Philippines (Oct.

26-29, 2015) Year 2 Quarter 3 (Apr. 1 – June 30, 2016)


- Innovative Strategies for Development Summit 2016, Crowne Plaza Hotel, Ortigas Center, Pasig City (June 8-10, 2016)

Year 2 Quarter 4 (Jul 1 – Sep 30, 2016)

- 2016 International Conference on Urban Development, Sofitel Plaza, Pasay City (July 12-13, 2016)

- Cards and Payments 2016, SMX Mall of Asia, Pasay City (Sept. 6-7, 2016)

2.2.3 Local Government and Decentralization 2.2.3-5 Number of sub-national entities receiving USG assistance that improve their performance


- Cagayan de Oro City - Pulilan, Bulacan - Zamboanga City


Year 2 Quarter 4 (July 1 – Sept. 30, 2016) - Valenzuela City

PPP Public/Private Partnerships PPP3 Number of organizations (for and not-for-profit, and government) that have applied new technologies and/or management practices due to USG-supported Public-Private Partnerships (PPPs)


- Cagayan de Oro City - Pulilan, Bulacan - Zamboanga City - Department of Social Welfare and Development (DSWD)

Year 2 Quarter 1 (Oct. 1 – Dec. 31, 2015) - Cagayan de Oro Electric Power & Light Company (CEPALCO) - Cagayan de Oro Water District (COWD) - Zamboanga City Water District (ZCWD) - Palawan Electric Cooperative (PALECO)


Year 2 Quarter 3 (Apr. 1 – June 30, 2016) - Bureau of Internal Revenue (BIR)

Year 2 Quarter 4 (July 1 – Sept. 30, 2016) - Valenzuela City - University of the Visayas (UV)

EG.4.2-2 Number of financial intermediaries serving poor households and microenterprises supported by USG assistance Year 3, Quarter 1 (Oct. 1 – Dec. 31, 2016)

- Land Bank of the Philippines


GNDR Gender GNDR-2 Percentage of female participants in USG-assisted programs designed to increase access to productive economic resources (assets, credit, income or employment)

Male Female Total % Male % Female Year 1 DSWD – MCCT Davao del Norte - 3 3 0% 100% NCR – MCCT Training QC, 7/24/15 1 13 14 7% 93% NCR – MCCT Training Manila, 8/8/15 18 185 203 9% 91% E-payments Technology & Innovations for Business, Puerto Princesa City and local chambers of commerce, 9/29 – 9/30

21 31 52 40% 60%

Year 1 Total 40 232 272 15% 85% Year 2 FICCO Training, 3/19/16 to 3/20/16 2,455 6,421 8,876 28% 72% Year 2 Total 2,455 6,421 8,876 28% 72% Cumulative 2,495 6,653 9,148 27% 73%


ANNEX 3: CDI Snapshot

Pulilan Tagbilaran City Iloilo City Quezon City Valenzuela City Implementation Challenges

• Pulilan terminated the mobile money payroll services with BanKO to comply with the provisions of the Department of Finance Circular No. 001-2015, which reinforces the Treasury Single Account (TSA) system for better cash management and greater transparency in public financial management.

• Until December 2016, when E-PESO paid the new Mayor a courtesy visit, E-PESO did not engage with the municipality.

• Because the e-payments technical working group is ad-hoc, members prioritize their main tasks. For Tagbilaran, the priority task for the period was the automation of the business permit and licensing permitting system, which had to be completed in time for the January 21 deadline.

• Low visibility of E-PESO technical team.

• Low visibility of E-PESO team for an extended period. Because of the long gaps between visits, team had to re-introduce the project to department heads and secure buy-in.

• Promoting P2G services already available require complementary and continuous effort by public (LGU) and private (service providers) sector.

Efforts of the LGU in promoting the services via the existing touch points (social media accounts, alerts, mailers, flyers, posters, announcements during recurring events e.g. general assemblies, ceremonies etc.) can be complemented with existing marketing efforts of the service provider via existing touch points – CICOs, frontliners (especially personnel who handle account openings), alerts, mailers, flyers, and posters. Collective effort via existing touch points is not only cost effective, as this requires very minimal marketing investment, but it is also sustainable and continuous.

Policy and Governance Support

• The municipal resolution enacted in 2013 was specific to recognizing BanKO as an e-payment and collection service provider. A new ordinance authorizing the municipality to collect and disburse electronically has to be enacted.

N/A N/A • Enact a local ordinance that gives taxpayers who opt to pay digitally a discount/incentive.

• Enact a local ordinance that gives taxpayers who opt to pay digitally a discount/incentive.


U.S. Agency for International Development 1300 Pennsylvania Avenue, NW

Washington, DC 20523 Tel: (202) 712-0000 Fax: (202) 216-3524

www.usaid.gov

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