SCMAP Perspective is our fortnightly column on PortCalls, tackling the latest developments in the supply chain industry, as well as updates from within SCMAP. On this column, Henrik Batallones revisits the cashless economy and looks at the gaps that remain, especially in business-to-business transactions.
Filling in the gaps
As I sit down to write this column, I remember a previous column that remains one of my favorites: the one I wrote in late 2017 about the cashless economy as practiced in Hong Kong. I spent a whole day relying only on my Octopus card for everything, from train rides to lunch.
It still remains an illuminating experience, but eight years on a lot has, of course, changed. In hindsight, what I wrote about them is quaint compared to the cashless economies we have witnessed now. Take Singapore, which has really embraced it to the point that only a few stores, mostly hawker stalls, take cash. One time, I had dinner at a food court inside a mall; the server told me how much my meal cost, and then showed me the machine where I will tap my card. I had cash ready, but across those three days I don’t think I ever used it for anything, relying instead on cards (both debit and credit).
Of course it isn’t the full experience yet, as I hadn’t used apps to pay for things there. (That needs an Internet connection, and roaming charges are expensive.) In fact, you no longer need to get an EZ-Link card – their equivalent to the Octopus – to ride public transport. You can instead register your own contactless debit or credit card to the SimplyGo and use it to get in and out of train stations and buses. Talk about frictionless.
I talk as if the Philippines is behind, but not really. We know how GCash has become such a byword for payments since the early months of the pandemic. Maya moving towards enabling cashless payments for merchants has made it a more viable option for more people, whether you’re using a card or your app. The entry of digital banks has also broadened the banking ecosystem, especially for those who’ve always had difficulty accessing such services. Credit must go to the Bangko Sentral ng Pilipinas, whose crafting of the Digital Payments Transformation Roadmap enabled the development of digital cash transfers, a national standardized QR code system, and regulations governing digital banks.
But there is, of course, still a long way to go. For one, there are trust issues, as seen in instances of missing money in digital wallets and the fear of using such apps to harvest data. There’s also something as basic as systems going down in the middle of the transaction – you may have seen memes of people realizing they can’t pay for their food because GCash went down and they don’t have cash in hand; this does happen. Perhaps most tellingly, some merchants still do not accept digital payments, which can be a pain for those who have embraced the possibilities of the cashless economy more closely than others.
There are also gaps in business-to-business transactions, and I feel this is a bigger hurdle we have to jump. Some processes still require a physical paper trail, like clearing checks or reconciling accounts. During a recent meeting with the Fintech Alliance, I learned that certain banks are rolling out tools that make these processes easier, resulting in something “phygital” – the coming together of physical and digital platforms to make a seamless customer experience, adapting to what the transaction requires at any given time. Have a check? No problem. Have everything in a digital wallet? No problem, either.
The challenge, of course, would be making stakeholders understand the benefits of such tools, and eventually teaching them how to use said tools. And this goes beyond payments. Any transaction with a financial component can be made faster and more responsive with better use of financial technology. Imagine not having to wait for the bank to open before a container can be cleared for release in the ports. Faster movement of goods, less congestion, and perhaps, a better quality of product for consumers.
We welcome the commitment of the Fintech Alliance and the Department of Trade and Industry to identify gaps and opportunities particularly in logistics processes, such as in trade facilitation and warehousing, and how financial tools and technologies can help make things better and more efficient. The acknowledgment that it all begins with educating all stakeholders, from executives to frontliners, is the necessary first step. We don’t have to be as cashless as Singapore – but more options means more convenience, and a better experience for everyone.