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Go cashless

/ 10:55 PM August 19, 2013

The massive corruption attending the pork barrel funds highlights the ease with which unscrupulous individuals steal billions of pesos in taxpayers’ money. The brazen theft of public money is, to some extent, due to the fact that hard cash remains king in all financial dealings in the Philippines. A recent international study cited by the Bangko Sentral ng Pilipinas last week validated this fact—that 98 percent of all retail financial transactions in the country are being done in cash, creating inefficiencies and leakages in the economy. This is also the reason for the widespread corruption in government agencies where the highest officials down to the lowly clerks easily take bribes or kickbacks in hard cash.

“Imagine the lack of transparency that it generates,” Bangko Sentral Deputy Governor Nestor Espenilla wondered, citing the initial findings of the unreleased study conducted by the Better Than Cash Alliance (BTCA). The study showed that the Philippines lagged far behind countries like South Korea, where as much as 60 percent of all transactions are “digitized,” or done using credit cards, debit cards and mobile phone wallets. The BTCA is a privately funded organization that promotes the increased use of electronic payment platforms to facilitate transparency in government transactions around the world. The group was launched in September 2012 and was funded initially by the Bill and Melinda Gates Foundation, US Agency for International Development, Visa Inc., Citigroup, and Ford Foundation.

The benefits of going “cashless” are obvious. “Digitized money is [easier to track]. Not only is it more efficient, it’s also more transparent because everything is recorded,” Espenilla explained. The Aquino administration actually embraced the aspiration of the BTCA when it signed up with the coalition late last year. In fact, the billions of pesos in doles under the Conditional Cash Transfer program were already being disbursed using mobile phone wallets with the help of the Philippines’ top telecommunication companies. Last January, the Philippine National Police also switched from checks to electronic payments of the monthly retirement benefits of its more than 50,000 retirees. The use of automated teller machines for pension payments—instead of the traditional check payments—enabled the government to weed out fictitious or “ghost” entries from the PNP pensioner database.


The government has also adopted the Cashless Card Purchase system, which was piloted by the Department of National Defense. This enabled government personnel to use a card linked to an online system for authorized purchases, resulting in the easier monitoring of government transactions, accurate liquidation and auditing, and efficient and transparent financial management in the agency.

Another government initiative is the National Payroll System (NPS), which was tested by six pilot agencies, including the budget and finance departments, the National Competitiveness Council, the Commission on Audit and the Treasury. The NPS sought to facilitate the shift from cash or check payments to an electronic-based salary payment system, eliminating “ghost” entries in the payroll. The Philippine Government Electronic Procurement System was also set up to allow the online procurement of supplies and services for government offices.

“Cash-based transactions have long been the norm for our public institutions, but this system has also opened up considerable spaces for irregularity and abuse. We’re tapping digital technology not only to close the gaps that have allowed corruption to take root in the bureaucracy, but also to make service delivery much more efficient than it is now,” Budget Secretary Florencio Abad observed, correctly, early this year.

It’s time the Aquino administration ordered the shift to digital transactions for agencies perceived to be highly corrupt. Imagine if all transactions involving the Bureaus of Internal Revenue and of Customs, the Land Transportation Office, and local government units are in digital form. Imagine if all transactions among private businesses are also done in e-payments. Then all financial dealings will have an instant record and any misdeed will be easily tracked. Corrupt politicians and public servants will then find it extremely difficult to collect bribes and kickbacks.

There is enough reason to believe that a cashless society will lead to transparency and address the festering corruption in government.

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