Interview: Simoun Ung

In what ways did Covid-19 measures alter consumer perceptions of cashless transactions, and to what extent will this fuel the digital economy?

SIMOUN UNG: Covid-19-related lockdowns forced many consumers to transact electronically in order to limit physical interaction amid hygiene concerns over handling cash. Prior to the pandemic in 2019, the peso value of electronic transactions through PESON et and InstaPay was roughly on a par with that of ATM cash withdrawals. For 2020, however, the value is expected to be double that of ATM withdrawals. The acceleration of digital payments must be considered in light of two unusual conditions: consumers had little choice other than electronic payments during lockdown; and the financial industry waived all fees associated with PESON et and InstaPay for consumers. It will be interesting to observe if the shift in consumer payment behaviour to electronic means is temporary or lasting.

How do you assess the competition among e-money and digital payment providers in the region?

UNG: Competition in the e-money and digital payments segment will continue to be vibrant, bolstered by new entrants from outside of the financial industry – likely from mobile network operators and technology giants such as Facebook, Apple, Microsoft, Google and Amazon. Moreover, central banks will play ever-increasing roles – not just as regulators, but also as issuers of digital currencies. Yet for the foreseeable future the primary competition for the industry will continue to be the preference of cash.

What opportunities and challenges do you identify in the creation of an effective cross-border and real-time payment network in South-east Asia?

UNG: The differences in language, customs and regulations across the countries of South-east Asia will continue to pose challenges for cross-border and real-time payment networks. The typical concerns for payments also remain – namely the settlement of funds – in the face of differing dispute resolution mechanisms and money laundering concerns. Nevertheless, there are innumerable opportunities in the creation of a cross-border, real-time regional payment network.

Which measures should be prioritised to strengthen and enforce data protection laws to boost transparency in the digital economy?

UNG: The enforcement of the county’s data protection laws requires training and equipping law enforcement and the judiciary. The Commission on Elections was hacked in 2016, which resulted in the exposure of sensitive personal information, including the biometrics of 55m voters; in 2020 the court cleared the accused due to a lack of evidence directly identifying him as the perpetrator. Bangko Sentral ng Pilipinas, in its role as the nation’s central bank, supervises the payments industry, including monitoring compliance with the data privacy law in coordination with the National Privacy Commission. However, there is no similar requirement for merchants and their establishments. With physical goods, Filipino consumers can look for the Philippine Standard certification mark for quality to be assured of the safety of the product, but there is no similar certification in place for data privacy at this time, thus consumers are left to fend for themselves.

To what extent is the Philippines prepared to initiate a system that allows users to pay for goods and services with the same card online and offline?

UNG: The Philippines already implemented a stored-value payment system in 2015 – similar to the Octopus card in Hong Kong – after bidding out the automated fare collection system. Beyond the mass transit system, the stored-value card is accepted at a few bus lines and select convenience stores. The Department of Transport is exploring alternative payment modalities in its drive to modernise the public transport system.