14Th Quarterly Report 1St Quarter, Year Five, October 1 – December 31, 2018

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14Th Quarterly Report 1St Quarter, Year Five, October 1 – December 31, 2018 USAID/E-PESO ACTIVITY 14th Quarterly Report 1st Quarter, Year Five, October 1 – December 31, 2018 Submission Date: January 30, 2019 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. 2 CONTENTS ACRONYMS ..........................................................................................................................................................3 1. PROGRAM OVERVIEW AND INTRODUCTION ..........................................................................5 2. ACTIVITY IMPLEMENTATION PROGRESS .....................................................................................7 2.1 Implementation Status ............................................................................................................................7 2.2 Implementation Challenges ................................................................................................................. 30 2.3 PMP Update ........................................................................................................................................... 32 2.4 Progress Narrative ............................................................................................................................... 33 3. INTEGRATION OF CROSSCUTTING ISSUES and USAID FORWARD PRIORITIES .......... 43 3.1 Gender Equality, Female Empowerment, and Disability Action ................................................... 43 3.2 Policy and Governance Support ........................................................................................................ 43 3.3 Public Private Partnerships (PPP) ....................................................................................................... 44 4. STAKEHOLDER PARTICIPATION AND INVOLVEMENT ........................................................ 44 5. MANAGEMENT AND ADMINISTRATIVE ISSUES ...................................................................... 44 6. LESSONS LEARNED ........................................................................................................................... 45 7. PLANNED ACTIVITIES FOR NEXT QUARTER INCLUDING UPCOMING EVENTS ........ 47 ANNEX 1: Press Coverage and Mentions ..................................................................................................... 50 ANNEX 2: Summary of Results to Date by Key Indicator ......................................................................... 51 ANNEX 3: Institutions with PESONet and/or InstaPay-enabled Products.................................................71 ANNEX 4: Institutions Connected to PESONet’s and/or InstaPay’s (CSO)............................................ 73 2 ACRONYMS ACH Automated Clearing House AFCS Automated Fare Collection System AML Anti Money Laundering ATM Automated Teller Machine BAP Bankers Association of the Philippines BIR Bureau of Internal Revenue BSFI BSP Supervised Financial Institutions BSP Bangko Sentral ng Pilipinas BTCA Better Than Cash Alliance BTMS Budget and Treasury Management System CAS Computerized Accounting System CDA Cooperative Development Authority CDI Cities Development Initiative COA Commission on Audit 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 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 EMI Electronic Money Issuer EPB Electronic bills payment ERC Energy Regulatory Commission ETRACS Enhanced Tax Revenue Assessment and Collection System G2P Government to Person GPH Government of the Philippines HDMF Home Development Mutual Fund IFAO Inclusive Finance Advocacy Office USAID/E-PESO Quarterly Report (October-December 2018) 3 3 LBP Land Bank of the Philippines LGU Local Government Unit MOA Memorandum of Agreement MOU Memorandum of Understanding MSME Micro, Small, and Medium Enterprises NATCCO National Confederation of Cooperatives NBSFI National Baseline Study on Financial Inclusion NGA National Government Agency NMIS National Meat Inspection Service NRPS National Retail Payment System P2G Person to Government PCHC Philippine Clearing House Corporation PFG Partnership for Growth POS Point-of-Sale Device PPMI Philippine Payments Management Inc. PPP Public Private Partnership PRC Philippine Regulation Commission PSA Philippine Statistics Authority PSMB Payments System Management Body QR Code Quick Response Code RBAP Rural Bankers Association of the Philippines SGM Settlement Guarantee Mechanism TSP Tax Service Provider TWG Technical Working Group USAID United States Agency for International Development USAID/E-PESO Quarterly Report (October-December 2018) 4 4 1. PROGRAM OVERVIEW AND INTRODUCTION Program Name: USAID/E-PESO Activity Activity Start Date and End March 18, 2015-March 17, 2020 Date: Name of Prime Chemonics International Inc. Implementing Partner: [Contract/Agreement] AID-492-C-15-00001 Number: Leonine Initiatives Laggui and Associates Name of Subcontractors: Mode Devi Publishing, Inc. CAI-STA Philippines Inc. Bangko Sentral ng Pilipinas Department of Budget and Management Major Counterpart Department of the Interior and Local Government Organizations Department of Social Welfare and Development Bureau of Internal Revenue Philippine Payments Management, Inc. Geographic Coverage Philippines (cities and or countries) Reporting Period: October 1, 2017 – September 30, 2018 The USAID/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. USAID/E-PESO also contributes to USAID/Philippines’ goals in democracy, rights and governance as the expansion of digital finance systems contribute to greater accountability, reduced corruption and exclusion of the poor, and better opportunities of good governance, particularly at the local level. 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 and good governance. USAID/E-PESO partners with the Government of the Philippines (GPH) and private sector actors to achieve a rapid, widespread increase in e-payment adoption and usage, increased financial transparency and accountability, and more efficient and more equitable governance. Through program activities, USAID/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 an electronic-based economy, USAID/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 a 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 and a system for transparent and traceable financial transactions. This broader range of financial services can help Filipinos build assets, better withstand economic shocks, and participate more broadly in the formal economy and increase the engagement of a wider Filipino citizenry. e-Payments offer an improved ability to track financial flows in line with GPH’s thrust towards greater transparency and accountability in financial transactions, and USAID’s objectives to increase participation and reduce corruption. USAID/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 USAID/E-PESO Quarterly Report (October-December 2018) 5 5 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 Strategy for Financial Inclusion capitalizes on global trends and focuses heavily on ensuring that most Filipinos can have access to electronic transaction accounts. Over the life of the project, 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 services, and a stronger regulatory environment that protects consumers. The exponential growth in e-payments will stimulate private sector investment and ensure that Filipinos have access to critical financial services that set the stage for a more inclusive society. To fulfill PFG goals and USAID/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
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