USAID/E-PESO ACTIVITY 19th Quarterly Report 3nd Quarter, Year Six, April 1 – June 30, 2020 Submission Date: July 31, 2020 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 ................................................................................................................................................. i EXECUTIVE SUMMARY .......................................................................................................................... 1 PROGRAM OVERVIEW AND INTRODUCTION ........................................................................... 3 PROJECT ACHIEVEMENTS .................................................................................................................... 5 SUB-PURPOSE I: RAPID ADOPTION OF E-PAYMENTS IN FINANCIAL SYSTEMS ......... 5 SUB-PURPOSE 2: INFRASTRUCTURE FOR E-PAYMENTS EXPANDED ......................... 300 SUB-PURPOSE 3: ENABLING ENVIRONMENT FOR E-PAYMENTS IMPROVED ......... 300 SUB-PURPOSE 4: GAPS IN BROADER E-PAYMENT ECOSYSTEM ADDRESED ............. 36 CROSS-CUTTING AND SUPPORTING ACTIVITIES .................................................................... 37 CHALLENGES AND LESSONS LEARNED ....................................................................................... 39 INTEGRATION OF CROSSCUTTING ISSUES and USAID FORWARD PRIORITIES .......... 41 GENDER EQUALITY, FEMALE EMPOWERMENT, AND DISABILITY ACTION...................... 41 POLICY AND GOVERNANCE SUPPORT ....................................................................................... 41 PUBLIC PRIVATE PARTNERSHIPS (PPP) ........................................................................................... 42 STAKEHOLDER PARTICIPATION AND INVOLVEMENT ......................................................... 42 MANAGEMENT AND ADMINISTRATIVE ISSUES ........................................................................ 42 PMP UPDATE ........................................................................................................................................... 43 TARGETS AND INDICATORS AS OF YEAR 6 QUARTER 2 ........................................................ 44 ANNEX 1: Press Coverage and Mentions ......................................................................................... 55 ANNEX 2: Summary of Results to Date by Key Indicator ............................................................ 63 ANNEX 3: Institutions with PESONet and/or InstaPay-enabled Products Available on their Internet and/or Mobile Channels ................................................................................. 100 ANNEX 4: Institutions Connected to PESONet’s and/or InstaPay’s Clearing Switch Operators (CSO) ....................................................................................................................... 104 ANNEX 5: Banked Campaign Indicators..........................................................................................106 ANNEX 6: Bureau of Internal Campaign E-Filing and E-Payment Social Media Campaign Analytics......................................................................................................................................108 ANNEX 7: Department of Social Welfare and Development Social Media Campaign Analytics......................................................................................................................................109 ANNEX 8: Financial Literacy Training Program Write Shop.......................................................111 ANNEX 9: Media Interviews on ReliefAgad and E-Payments......................................................112 ANNEX 10: Initial Assessment of Qualified Women Entrepreneurs and Mentors for the IDM................................................................................................................................113 ANNEX 11: Banked Campaign Press Releases...............................................................................114 2 ACRONYMS ACH Automated Clearing House ATM Automated Teller Machine BAP Banker’s Association of the Philippines BIR Bureau of Internal Revenue BRD Business Requirements Document BSFI BSP Supervised Financial Institutions BSP Central Bank of the Philippines BTCA Better Than Cash Alliance BTr Bureau of Treasury CCT Conditional Cash Transfer CDI Cities Development Initiative DBM Department of Budget and Management DBP Development Bank of the Philippines DILG Department of Interior and Local Government DevCon Developers Connect Philippines DoF Department of Finance DSWD Department of Social Welfare and Development DTI Department of Trade and Industry eBIRForm Electronic BIR Tax Filing Form EFT Electronic Fund Transfer eTPSCert Electronic Tax Software Provider Certification ETRACS Enhanced Tax Revenue Assessment and Collection System GPH Government of the Philippines GRC Governance, Risk, and Compliance KOICA Korea International Cooperation Agency LGU Local Government Unit MOU Memorandum of Understanding MSME Micro, Small, and Medium Enterprise MVP Minimum viable products NATCCO National Confederation of Cooperatives NRPS National Retail Payment System OTOP One Town One Product USAID/E-PESO 19th Quarter Report (April 1 – June 30, 2020) i i Pag-IBIG Home Development Mutual Fund PCHC Philippine Clearing House Corporation PEPPOL Pan-European Public Procurement Online PFG Partnership for Growth PPMI Philippine Payments Management, Inc. PPP Public Private Partnership QR Code Quick Response Code RBAP Rural Bankers Association of the Philippines RPT Real Property Taxes SSS Social Security System SuG Start-up group TRISD Technology Risk and Innovation Supervision Department TSP Tax Service Provider TWG Technical working group WE Women entrepreneurs W-GDP Women’s Global Development and Prosperity Initiative Fund USAID United States Agency for International Development USAID/E-PESO 19th Quarter Report (April 1 – June 30, 2020) ii ii EXECUTIVE SUMMARY The USAID/E-PESO program promotes broader economic growth and financial inclusion by helping to increase the use of digital payments in the Philippines. In December 2019, a Better Than Cash Alliance report stated that e-payments in the Philippines made up ten percent of all total payment transactions in 2018. This is an indicator of success for initiatives undertaken by E-PESO, which had aimed to increase e-payments from one percent in 2015, to ten percent of the total volume of domestic retail transactions by 2020. For the quarter ending June 30, 2020, E-PESO continued to deliver target outputs and milestones despite the mobility and physical distancing restrictions brought about by the Covid-19 pandemic. In driving e-payments adoption by businesses, E-PESO completed the multi-agency writeshop to draft the financial literacy manual for DSWD’s 4Ps beneficiaries. This, together with the policy refinements that E-PESO is working with DSWD to shift payments to 4Ps beneficiaries from cash cards to transaction accounts (i.e. bank or e-money accounts), will enable up to 4.3 million 4Ps beneficiaries to be financially included. The draft manual has been submitted to DSWD for their review and comments. In June 2020, the #Hack^tax innovation challenge was concluded with an awarding ceremony attended by DOF Secretary Dominguez and BIR Commissioner Dulay. The top prize went to an app that allows taxpayers to file and pay their taxes using Facebook Messenger. Co-designed and co-implemented with government and private sector, #Hack^tax attracted involvement from businesses who provided resources, mentorship and funding to the semi-finalists in the innovation challenge including Microsoft, Amazon, Oracle, McDonalds, etc. E-PESO also assisted BIR with a digital filing and payments communications campaign to encourage the public to file and pay their taxes digitally for their safety and convenience under community quarantine. On E-PESO’s COVID-19 response work, the ReliefAgad app was completed and launched by DSWD targeting SAP beneficiaries. The app allowed them to safely and conveniently register with their smartphones using their financial transaction accounts. When DSWD closed registration on June 25, 2020, 4.3 million SAP beneficiaries registered using the app demonstrating a wide interest in accessing government programs and benefits digitally. 28% enrolled their existing transaction accounts where they would like to receive their benefits in, while the rest would be offered to open new accounts by participating financial institutions which they can use to receive their benefits. Result is that more low-income people will own transaction accounts for better financial inclusion. Aside from app development, E-PESO also provided communications awareness support to DSWD to address the public’s need for accurate information on SAP, as well as customer support for beneficiaries encountering challenges while using the ReliefAgad app. E-PESO completed the digital payments communications awareness campaign to encourage people with financial transaction accounts to shift to digital payments for their health and safety especially in the midst of the covid pandemic. In his pre- State of the Nation public presentation, BSP Governor Diokno reported that digital payments usage expanded substantially during the community quarantine period citing