In the bustling online marketplace of the Philippines, a new headwind is unfolding that strikes at the heart of small business survival. Many MSMEs, based on what we read on social media, are up in arms against the mandatory implementation of the Philippine Trustmark by DTI, enforced through a Department Administrative Order. A key issue raised is that the compulsory nature of the Trustmark contradicts the spirit of the Internet Transaction Act (RA 11967), which says it is voluntary.

The debate highlights the tension between consumer protection and ease of doing business in the fast-growing Philippine digital economy. The DTI argues that the Trustmark will protect consumers from fraud and scams, which are rapidly becoming a significant problem in the online space, and build trust in e-commerce. But critics like Senator Bam Aquino and MSMEs counter that the costs and bureaucracy outweigh the benefits.

An online trustmark is a digital badge, symbol, or emblem displayed on an e-commerce website that signifies the business has been verified and deemed trustworthy by an issuing authority. It also provides a way to hold sellers accountable, thereby boosting consumer confidence in online shopping. In other jurisdictions, the trustmark also serves to reassure consumers that the business offers security in transactions and conforms with existing data privacy laws.

The debate has become a pivotal moment in shaping the future of e-commerce and entrepreneurship in the country. No local study has been done yet to back this up, but underground online selling has grown to become a primary micro business sector in the fast-growing Philippine digital economy. For many, it is not just about livelihood but a vital lifeline for survival.

Senator Aquino argues that the mandatory implementation of the DTI policy goes against the spirit of both the Internet Transactions Act (ITA) and the Ease of Doing Business Act (EODB Act), which are designed to foster easier, more inclusive online commerce. The ITA establishes that the Trustmark program should be voluntary, not mandatory. The EODB Act, on the other hand, aims to streamline business processes and reduce red tape. The mandatory Trustmark introduces bureaucratic requirements and compliance hurdles, which Aquino argues contradict the law's intent to make business easier and faster to operate.

The tension clearly lies in the dual, and often competing, objectives of the government. On one hand, there is a clear and urgent need to safeguard consumers from a rising tide of online fraud, substandard products, and deceptive practices. On the other hand, there is a strong push to keep the online marketplace open and accessible for small entrepreneurs. By dismantling bureaucratic hurdles that could stifle the growth of small online businesses, we can foster a vibrant and inclusive e-commerce sector, which is crucial for growing the digital economy and job creation.

Small online entrepreneurs argue that while consumer trust is essential, costly and complex regulations can become a barrier to entry, potentially driving more sellers into the informal economy. Given the current general negative sentiment about how public funds are being wasted, the pushback from struggling small businesses is understandable.

At the other end of the spectrum, we see consumer advocacy groups supporting stronger government oversight, arguing that a well-regulated market ultimately benefits legitimate businesses by weeding out unscrupulous players and building the long-term consumer confidence necessary for sustainable growth.

Being trusted by consumers is a competitive edge for e-commerce players. Even if it is made voluntary, online sellers will eventually realize that, to compete, they must first establish their trustworthiness. How about rolling out the trustmark in stages—first for large platforms, then medium businesses, and finally micro-sellers. This will give MSMEs time to adapt, learn compliance requirements, and budget for fees. This will also prevent sudden disruption and allow gradual formalization of the online economy.

Pairing the trustmark with free training on digital safety, online marketing, and compliance will help entrepreneurs see value beyond just a “badge” and gain skills that help them grow. In the end, it will transform the trustmark from a cost into an investment in business development.

How about making the fees tiered based on business size or revenue? Micro-entrepreneurs could pay a symbolic or heavily discounted fee, while larger e-commerce platforms and established companies shoulder the full cost. This will keep the barrier low for small players while still funding consumer protection mechanisms.

There is no simple solution to the ongoing tension. DTI will have to play a balancing act that will require continuous conversations with the business community and consumer representatives. The success of the Philippine digital economy will hinge on its ability to navigate this complex terrain, fostering an environment where businesses can thrive without compromising the safety and trust of the consumers they serve.

(The author is an executive member of the National Innovation Council, lead convener of the Alliance for Technology Innovators for the Nation (ATIN), vice president of the Analytics and AI Association of the Philippines, and vice president of UP System Information Technology Foundation. Email: [email protected])