Wednesday, May 28, 2008

Problems in bringing Paypal to the Philippines

This article appeared last October 16, 2006 in Manila Times.

There are ongoing discussions on how to bring Paypal to the Philippines. Paypal is a payment processor based in the US where members process payment and transfer funds through their respective accounts.

Last Thursday, Paypal just had an upgrade that finally included (at last!) the Philippines where one can sign up and have an account for purposes of sending money overseas. However, it can’t be used for receiving money yet, which in fact, hinders us to take full advantage of e-commerce, locally.

In discussion with industry players, I believe that these are the following reasons why we don’t have the likes of Paypal in the Philippines and what would it take to attract them:

  • Demonstrate that we are capable of prosecuting cybercriminals in the country. I have no qualms on the dedication of the National Bureau of Investigation and Philippine National Police in this area. They are fortunate to have people like Col. Gilbert Sosa and Atty. Palmer Mallari who passionately perform their jobs. However, for as long as the government does not allot serious funding to boost cybercrime infrastructure and training of personnel, our efforts will always be dependent on dole outs from international agencies. It is unfortunate to see that our leaders can fund multimillion annual community e-Center projects and yet cold in allotting money to combat cybercrime despite being made aware of the situation repeatedly.

  • Full e-consumer and merchant protection implementation mechanism is a must. The lack of concrete consumer protection programs on e-commerce, value-added services, e-banking shows great fear as to how e-commerce can be abused in the country by both consumers and merchants. It is not enough that the guidelines are in place—it should be put in practice as well. For instance, the Bangko Sentral ng Pilipinas (BSP) issued circular #542 meant to provide consumer protection guidelines on e-banking. However, the order does not cover how consumers can complain to the BSP if there’s a deadlock between the bank and its customer. A separate BSP circular is in the works for that.

  • An efficient banking system that supports interbank fund transfer is critical. We have existing banking services that are very much anticonsumer. I have a friend based in the province who deposited an amount to my bank account and the branch in her location charged P100 for the transaction. What is the point of being hightech, implementing Internet banking and all? These banks exploit numerous ways to charge the consumer for the most ridiculous reason.
As Paypal relies on interbank fund transfer, the lack of such system in the country is the biggest deterrent for bringing Paypal in the Philippines. Yes, we may be high-tech in our banking systems but still, same day clearing and interbank fund transfer from interbanking networks to rural banks, is vaguely in place. This is sad.

During the lobbying days of the e-Commerce Law, BSP’s real time gross settlement system (RTGS) was very promising and made an impression that it can benefit the traditional small and medium enterprises in the country. Up to this time—yes the banking community can use it already —the traditional Juan de la Cruz, being high-tech himself, ended up with obnoxious bank charges and in other cases, interbank fund transfer is still much of a dream. Perhaps it is time that someone out there will come up and define what modern banking really is—that is if we really want to attract the likes of Paypal in the Philippines.