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New Payment Service Hub to Support MSMEs and Ease Payments in the Philippines

Despite the lifting of the enhanced community quarantine (ECQ) in Metro Manila, the majority of micro, small, and medium enterprises (MSMEs) remain closed or operating at reduced capacity— As per a recent survey conducted by the United Nations Development Programme (UNDP) on the impact of COVID-19 on MSMEs in the Philippines, this is an indicator of the difficulties they face in returning to business operations.

MSMEs account for 99.5% of business establishments in the Philippines and employ approximately 63% of the labour force. MSMEs accounted for 40% of the country’s Gross Domestic Product in previous years (GDP). During the second quarter of 2020 and almost four months since the community quarantine was put in place, the country’s GDP sank to 16.5% as the Philippines experienced recession due to the COVID-19 pandemic.

To alleviate the burden on the country’s MSME’s and to provide a one-stop hub for financial transactions, a Philippine bank has launched a payment service. Its latest product offering allows businesses to simply send a link to customers that will automatically facilitate the payment process.

The all-in-one payment acceptance hub eliminates the need for MSMEs and their customers to exchange banking information. Instead, merchants will be able to collect the amount owed when customers click on the link and are redirected to either other payment platforms or locations that offer Kiosk payment services.

“Our main purpose is to empower MSMEs to uplift their businesses and enable inclusive prosperity by extending products that go beyond traditional banking services. We also believe that in order to achieve this, our organisation had to shift and pivot as well by educating them on the use of concrete solutions that will help keep their businesses afloat in the now normal,” said the bank’s vice president and SME segment head.

The new product is complemented by the newly launched MSME Business Banking App, a platform designed to handle MSMEs’ financial needs – from digital account opening to bill payment, online cheque deposit, and supplier and government payment processing. The two platforms are part of the bank’s larger MSME Business Banking Hub project, which seeks to tap into a network of one million registered businesses and 12 million self-employed micro-entrepreneurs.

“MSMEs are the backbone of the Philippine economy and their success is crucial especially amid challenging instances like the current pandemic. That being said, we want to make sure that every MSME goes to us for their digital and financial needs because we believe that we always come prepared with the right solution and answer for them when they do,” added the bank’s executive vice president and chief financial inclusive executive.

OpenGov Asia reported that when considering the innovation process, the image that typically comes to mind is that of multinational corporations with extensive R&D departments and large teams of researchers. Because they have fewer assets, limited cash reserves, and lower levels of productivity than their larger counterparts, MSMEs are the most vulnerable to economic shocks like the current health crisis. They must also deal with a variety of expenses such as insurance, debt payments, rent, and employee wages, all of which put a strain on their resources.

Despite their relatively low R&D budgets, MSMEs have significantly innovated their processes, resulting in an increase in the country’s Global Innovation Index (GII). The Philippines, which was ranked 73rd in 2018, is now ranked 54th out of 129 countries, with a score of 36.18. Considering the vast number of Philippine MSMEs compared to large enterprises, the MSME sector’s absolute influence on overall innovation remains significant.

In addition to payment requests and collect payments, the service payment acceptance hub accepts fund transfers, over-the-counter payments, e-wallets, and debit and credit cards at the point of sale. All whilst, the MSME Business Banking platform provides a broader range of services, including government and utility billing, international bank transfers, customisable business approvals, online cheque deposits, batch account opening, and multiple companies and subsidiaries enrolment.

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