The government should do due diligence on its financial technology contractors under the current fintech boom and the rush to digitalize, former Congressman Jericho Nograles warned in a statement issued Wednesday, October 26.
"The accelerated digital transformation requires the government to be more prudent in conducting due diligence on its potential partners," the solon stressed. "The contractors and partners must be credible and have a clean track record.”
Needless to say, agencies that contract out digital transaction services to fintech players and digital banks should be scrutinized thoroughly since their dealings have monetary repercussions and involve personal data, Nograles maintained.
Fintech companies and line agencies have bypassed procurement processes and charged hefty prices to consumers before.
Hence, a repeat of last year's PisoPay-Bureau of Quarantine fiasco should not happen, he underscored.
In November, 2021, Nograles led the Congressional inquiry on the irregular contract between the BOQ and PisoPay, a fintech startup providing remittance and money transfer transactions.
BOQ contracted PisoPay to help in the issuance of its International Certificate of Vaccination (ICV), commonly known as the “yellow card,” a requirement for outgoing overseas Filipino workers (OFWs).
Filipinos requesting for yellow cards shelled out P370 for a copy, of which P70 went to PisoPay.
The P70 service fee was deemed irregular because other government agencies only charged P30.
During the series of congressional inquiries, Nograles and other lawmakers discovered that PisoPay did not undergo the required bidding process.
In addition, PisoPay’s net financial capacity was insufficient. It was not qualified to enter contracts with the government.
As a result, the BOQ terminated its contract with PisoPay.
“The PisoPay-BOQ fiasco was a disservice to the Filipino people," Nograles reiterated. "We should not let this happen again."
“The government must adapt to the demands of the new normal, but it has to be careful in choosing its fintech partners."
"While there are a lot of credible players in the Philippines, there are also those that have proven that they are out to overcharge consumers for personal gain,” Nograles concluded.