Single ATM platform seen this year

MANILA, Philippines - The establishment of a single automated teller machine (ATM) switch will finally take shape this year, with the ongoing negotiations between existing operators BancNet and Megalink.

BancNet chairman Manuel C. Tagaza said the initiative has the endorsement of both the Bankers Association of the Philippines (BAP) and the Bangko Sentral ng Pilipinas (BSP).

Tagaza, who is also the senior vice president of the Bank of the Philippine Islands (BPI), said the BAP has approved the initiative. A working committee was also formed to work out the technical, financial and equity issues.

A single switch as a result of the merger should result in lower fees and charges for the public, since theoretically the inter-bank transaction between a Megalink-allied bank and a BancNet-allied bank will result in inter-bank charges.

“With just one switch, it will be operationally cheaper. With more members, the economies of scale will also result in lower cost,” Tagaza said, adding that both switch operators are banking on getting off the ground within the year.

One particular feature for the single ATM switch operator is that it will be run as a utility rather than a private-sector, for profit entity.

BAP president Lorenzo V. Tan confirmed the consolidation initiative.

“We are in discussions right now to merge or consolidate into one ATM platform,” said Tan, who is also the president of Rizal Commercial Banking Corp. (RCBC).

“The BAP is looking at a consolidated payments system. Discussions on the details are still ongoing,” Nestor V. Tan, Megalink board chairman and president and chief executive officer of BDO Unibank Inc., said.

BancNet is the largest ATM consortium in the Philippines, with stakeholders ranging from universal to rural banks, and a number of non-bank financial institutions.

The Megalink group has fewer members but with a large combined branch network dominated by the Union Bank of the Philippines (UBP) and BDO.

There are 13,129 ATMs nationwide as of June last year, based on BSP data.

BSP has always called for the merger of the ATM operators.

At present, BSP Deputy Governor Nestor V. Espenilla is in the forefront of the proposed National Payment System, an electronic platform interconnecting all payment channels nationwide. That includes cross-payments and inter-bank transfers at lowered transactions costs.

Espenilla said that the BSP is looking at a “cashless future” where all financial transactions are settled on electronic platforms.

But he also acknowledged that the Philippine banking system has a long way to go as 95 percent of transaction are still cash-based.

The regulator said that if households and businesses move significant amounts of cash transactions into the electronic realm, there will be large overall cost savings.

“What we want to see is an interconnected highway that links merchants and users so that for example, if you want to buy something, you can go to any merchant and use any payment means – cash, credit. That is what we want,” Espenilla said.