Higala, an innovative inclusive instant payment system (IIPS), has recently debuted in the Philippines with the aim of reducing the expenses associated with real-time transactions for those who have been financially marginalized. Described as a “financial superhighway,” this system is designed to link thrift banks, rural banks, and microfinance institutions that presently offer financial services in the country to instant payment capabilities.
The startup points out that among the 400 rural banks operating in the Philippines, merely 4.5% are actively engaged with InstaPay, an electronic fund transfer service introduced by the Bangko Sentral ng Pilipinas (BSP) in April 2018. According to Higala, the substantial expenses associated with switching and on-ramp processes have led to the exclusion of smaller banks from national payment networks, thus restricting the availability of financial services for their clientele.
To address this issue, Higala endeavors to enhance accessibility to real-time and instant payments for both consumers and merchants. Additionally, it is developing a variety of white-label app services featuring fundamental instant payment technology to support the digital transformation efforts of participating banks.
The system’s launch has been made possible through seed funding from Talino Venture Studios and US-based development firm Chemonics International. It utilizes the open-source payment platform Mojaloop, facilitating connectivity among banks, institutions, payment gateways, merchants, and the central bank.
Vice Catudio, president and CEO of Higala, expresses confidence that the system will contribute to the modernization of the country’s digital financial infrastructure and enable greater participation of financial institutions. He emphasizes the potential for new market players to develop and promote innovative payment services for both consumers and merchants, including the integration of solutions such as regulatory technologies like e-KYC and AML-TF monitoring, AI-based risk detection and management, banking microledgers, a payment hub enabling instant fund transfers across participating banks, and a global transaction gateway for remittance.
Winston Damarillo, CEO of Talino, underscores the importance of ensuring universal access to banking services by simplifying the process of obtaining bank accounts, reducing friction costs associated with digital payments, encouraging merchant acceptance, and empowering all financial institutions to offer these services to their constituents, particularly rural banks.
Source: fintechfutures.com
