ON October 20 Apple Inc. launched its new Apple Pay mobile-payment and digital-wallet service, which lets people with certain Apple mobile devices make payments at retail and online checkout stations. The purpose of this service is to allow consumers to do away with using plastic cards with magnetic strips that need to be run through a card reader.
Apple describes the current electronic-payment system as “outdated, vulnerable and insecure.” Apple Pay allows customers to place their Apple device near the point-of-sale (POS) system and authenticate their purchase with a fingerprint. The company says Apple Pay is more secure, easier and faster than the traditional “swipe” method.
If you ever used your automatic teller machine (ATM) card at the supermarket and had to leave the checkout stand to find a reader that would accept your card, Apple’s new service might be better for you. However, Filipinos are more inclined to buy things with cold, hard cash. In fact, the Philippines, along with Nigeria, ranks just near the bottom in using the so-called new digital economy. In 2008 the Philippines’s score was only 5.37; now it’s 19.38, just below Indonesia, which was given a score of 19.85.
The Philippines is not shy about using electronic means to buy stuff, as evidenced by the large number of websites that sell various merchandise. While there seems to be no complete statistics on local digital payments, the country’s two major cell-phone service providers have been in the digital-payment business for several years.
One of them, Smart Communications, has the Smart Money system, which, the company says, “is an electronic wallet, similar to a bank account, that allows you to do bills payment, reload of airtime and money transfers using a Smart mobile phone.” Smart is also issuing a MasterCard for ATM and debit-card transactions. The other, Globe Telecom, has Globe GCash, which also does those things. Still, it may be some time before we have a service similar to Apple Pay and its competitors in the United States.
About 40 percent of Filipinos use smartphones, while only 4 percent have a credit card. While that 40 percent certainly provides an adequate customer base for a smartphone POS payment system, putting the electronic infrastructure in place is a problem. This requires a substantial investment, as did the POS system for plastic cards, and the Philippines has received relatively little private equity investment to date. But that could change with the forthcoming Association of Southeast Asian Nations economic integration, because both Thailand and Malaysia have gone quite far into the digital economy.
The day when you will buy your clothes and groceries without being asked, “Current or savings?” may no longer be that distant, and the only thing you will have to remember is which thumb you used to authenticate your identity.
Image credits: Jimbo Albano