AF Payments Inc. (AFPI) sudsidized beep cards to the tune of P300 Million since it started operations in 2015, after clinching a concession agreement with the government, President and CEO JJ Moreno declared in his statement issued Monday, December 10.
"For the record, AFPI does not profit from (beep) cards sold to the public. On the contrary, we are even subsidizing them in the rail sector," he stated.
"Last year, we spent P9.8 Million in card subsidies, and this year, we will spend P48Million. Our estimates for next year’s subsidies will be at P70Million," Moreno maintained.
These subsidies come in the form of the difference between AFPI's card acquisitions cost and its selling price.
"We purchase the card at about $2-2.60 (approximately P114-148.50) and sell it to rail operators (PTOs) at P50. The PTO further subsidizes P20 and sells it to commuters at P30," he explained.
"The welfare of the riding public, and consumers in general, has always been the company’s top priority," says Moreno.
AFPI vehemently denied allegations of profiteering by taking advantage of the current global shortage of chips and selling cards at higher prices.
In sectors not covered by the Concession Agreement (bus, ferry, retail), beep™ cards are sold at cost or at a price point that factors in the card cost and distribution cost.
Online channels, meanwhile, would have additional operating costs, packaging, VAT, and commissions to the online platforms, hence they are priced a little higher.
As a response to a strong clamor from our customers to make beep™ card available online, AFPI allocated 1 percent of its inventory for online sales.
The beep operator estimated that this should be enough to fulfill the demand for online customers until the end of the year.
However, as of this writing, AFPI may have to discontinue online selling anytime now as it is about to reach 1 percent of allocated cards to be sold online.
AFPI did not anticipate that the demand for cards online would be this strong. It is, however, important to note that the bulk or about 94 percent of its cards still go to the rails/PTOs.
This is despite the fact that rails only constitute 18 percent of AFPI's entire ecosystem’s acceptance points.
"We do this because the transaction volumes are currently concentrated in rail," according to Moreno.
This week alone, AFPI has delivered a total of 150,000 cards to the PTOs, effectively supplying 80 percent of the total orders of PTOs for 2022.
"We are awaiting the delivery of our additional orders in the next few weeks, to be able to supply the balance of 20 percent before the year ends," he stated.