The predominantly red on white background logo of BancNet, the country’s interbank network, may soon be missed following the stamp of approval in April by the Philippine Competition Commission (PCC), after nearly two years from the merger of Philippine Clearing House Corp. (PCHC) and electronic payment network, BancNet.
The much-awaited PCC blessing of the marriage will pave the way for the renaming of BancNet, which is the surviving entity, to Philippines National Payments, Inc.
This means, we will eventually bid goodbye to the clearing switch operator for the real time electronic fund transfer marquee that we have been familiar with for 34 years now.
PCHC is the industry’s lone check clearing house while BancNet is the surviving entity with the union of Megalink-BancNet-and-ExpressNet, the online banking facility that allows ATM cardholders to enjoy the convenience and ease of bank transactions without physically going to brick and mortar branches or payment centers.
The PCC nod is, actually, the first obstacle the union hurdled. Where will it go from there? For those curious market observers, the next and final step is for PCHC and BancNet to obtain the go signal of the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC) before their union can be officially sanctified.
And the renaming hurdle is “the submission to both BSP and SEC,“ shared Bankers Association of the Philippines (BAP) Executive Director Benjamin “Ben” Castillo. The review process and renaming are expected to "take a good part" for the year.
BSP Governor Eli Remolona at the very onset has given his support to the union. “That will proceed,” was his response to my query regarding his view on the proposed union.
Despite this unequivocal endorsement, the BSP and the SEC are currently checking on the fine prints of the merger with a fine-tooth comb. In particular, both are studying the implications of the merger to the payment ecosystem.
Market competency and cost efficiency are the offspring of the union. It will create a unified operator of the country’s various payment streams – InstaPay, PesoNet, check clearing, and the Philippine Domestic Dollar Transfer Service System, an online, real-time gross settlement of domestic interbank US dollar transfer instructions and third-party account-to-account US dollars.
The market will benefit from the economies of scale by having key functions such as risk management, cybersecurity, and fraud management under one roof.
But wait there’s more! The merger will also streamline the entry and onboarding process for new players in the market as they will now only have to talk to one operator whenever they want to participate in any of the country’s payment streams.
“This unified structure aligns the Philippines with the country’s regional peers, who also have unified operators operating their payment streams as well as l consolidate resources and efforts to achieve compliance with global standards for Financial Market Infrastructures, as mandated by the BSP,” explained Mr. Ben.
Cost efficiency is realized from the merger. BancNet and PCHC are siblings with BAP as their parents. But, under the current set-up, each has its own office and workforce to maintain. Additionally, corporate meetings are held separately.
For an eager market observer and moving forward and on the backdrop of cost-efficiency, I am curious on the employment status of the workforce following the merger.
So far, it remains unclear whether the marriage would likewise mean sending some on a standby, which alternatively could mean a slight inching up of unemployment.
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