Beep card supplier subsidizes sale for P300 million amid global chip shortage

MANILA, Philippines — The supplier of Beep cards used in the railways said it has spent P300 million to lower the selling price to commuters, denying allegations it is exploiting the global chip shortage to gain extra profit.

AF Payments Inc. president and CEO JJ Moreno said the firm subsidizes the sale of Beep cards to rail lines given the difference between the cost of purchasing them and the price they are sold.

He said AF Payments has coughed up at least P300 million worth of subsidies through a concession agreement with the government.

AF Payments disbursed subsidies amounting to P9.8 million last year and P48 million this year to ensure the Beep cards are sold at an affordable rate. For 2023, the firm plans to spend P70 million in subsidies, especially as demand for Beep cards is projected to shoot up with the return of in-person classes.

“We purchase the card at about $2 to $2.60–approximately P114 to P148.50–and sell it to rail operators at P50. Rail operators further subsidize P20 and sell the card to commuters at P30,” Moreno said.

Outside of the concession, Moreno said Beep cards are sold at a price that factors in the cost of acquisition and distribution.

On the other hand, he said Beep cards retailed in digital channels would include additional fees to cover for commissions to the e-commerce platform, packaging and value-added tax.

AF Payments allocates one percent of its inventory for sale online, but distributes 94 percent to railways even though they account for just 18 percent of where Beep cards can be used.

However, Moreno said AF Payments will soon stop its online sale of Beep cards, as it is nearing to release all of the allotment devoted for e-commerce sites. Moving forward, the firm will focus on selling Beep cards in rail lines given the concentration of transaction volumes there.

AF Payments has delivered to rail operators 80 percent, or a total of 150,000, of the Beep cards committed for this year. It hopes to receive additional orders in the next few weeks to supply the remaining 20 percent before 2022 ends.