Note Taking on Digital Transformation in Banking (PDF)

Friday, August 23, 2024 FME 214 - What is Digital Transformation in Banking? Digital transformation in banking and nancial services signi es the seamless integration of technology into various facets of banking operations. It ushers in a profound shift in how banks operate...

Friday, August 23, 2024 FME 214 - What is Digital Transformation in Banking? Digital transformation in banking and nancial services signi es the seamless integration of technology into various facets of banking operations. It ushers in a profound shift in how banks operate and provide value to their clientele. - Digital Banking Digital banking enables the bank's customers to access banking products and use banking services via an online/electronic platforms. It is the digitalization of all banking operations to substitute the bank's physical presence, eliminating the customer's need to visit the branch. - Examples of Digital Banking Mobile Banking Digital transformation within the banking industry extends beyond mere payment transactions and peer-to-peer fund transfers. Mobile banking empowers customers with the capability to manage their bank accounts and online nancial activities seamlessly via smartphone applications. Digital Account Opening Banks have streamlined the account opening process by implementing automation, which shortens the time required to initiate a new bank account and diminishes the manual tasks that employees have to undertake. Digital Payments Financial institutions have integrated digital payment systems into their offerings, encompassing online transactions, mobile payments, and digital wallets. This allows customers the exibility to conduct transactions and money transfers using their smartphones or computers. 1  fl fi fi fi  Choosing Between Online Banks And Traditional Banks Accessibility The key difference between an online bank and traditional banks is the online option availability of having access to your account at any time and from anywhere with an internet connection. In contrast, traditional banking services require you to physically visit their local branch during business hours to perform these same tasks. Safety And Security Another key difference between online and traditional banks is security. When it comes to monetary purposes, there is common speculation that online and mobile banking are regarded as unprotected thus leading to a higher chance of fraud or theft of one's identity. Fees When it comes to fees, online banks typically charge cheaper fees and provide greater interest rates than traditional banks Customer Service Many traditional banks have the best advantage over online banks, which is in- person customer service, as the majority of people prefer to have their banking issues solved in person. Online banks often provide customer service via email, chatbot, or phone and may have limited customer service hours. - What are digital banking services? Obtaining bank statements Cash withdrawals Transfer money 2   Checking/savings account management Opening a digital bank account Loan management Bill payments Cheques management Transaction records monitoring Digital Banks in the Philippines with High Interest Rates - CIMB BANK = Interest rates: 2.6% p.a. for GSave (via GCash), up to 7% for MaxSave Next Gen Time Deposit - GO TYME BANK= Interest rate: 4% p.a. for the Go Save Account - UNION DIGITAL BANK = Interest rates: 4% p.a. for UD Savings, up to 6.75% p.a. for UD Time Deposit BENEFITS OF DIGITAL BANKING - Round-the-clock access. The biggest bene t of going digital is that banks can offer their services anytime and anywhere. - Unique banking features. Digital banking offers a variety of special features that go beyond what traditional banks offer. For instance, customers can invest in the stock market or buy cryptocurrencies directly through the mobile banking app itself - Innovative business solutions. The e-commerce sector is highly dependent on digital banking services. Increased competition in online shopping portals and marketplaces encourages businesses to engage with customers through innovative solutions. - Personalized offerings. The digital transformation in banking has resulted in banks and nancial institutions understanding customers' needs. Instead of making assumptions, they provide services based on their daily expenses and ease their experience. - Added transparency. Since bank accounts are accessible with a few clicks, banks can provide extra transparency to customers on their banking activities. This includes any withdrawals, transfers, deposits, and bill payments. Challenges of digital banking I. Security issues: Customer data is highly sensitive for banking institutions. Hackers and scammers are constantly trying new ways to get that information. Cyberattacks expose the bank and its customers to nancial fraud. Applying multi-factor authentication is one of the solutions to enhance fraud detection methods. 3  fi fi fi  EXAMPLE: Exec in Metrobank fraud charged - Maria Victoria 'Marivic' Lopez, head of the Metrobanks' Corporate Service Management for alleged quali ed theft, falsi cation and violation of the General Banking Law - The suspect allegedly funneled disbursed loans into ctitious accounts created in the name of one of the bank's biggest corporate clients, Universal Robina Corp. (URC). Cebuana Lhuillier Marketing Server Branch (2019) - Pawnshop and remittance company Cebuana Lhuillier became a data breach victim in January 2019. The incident occurred when hackers in ltrated one of Cebuana's email servers for its marketing activities, compromising the data of roughly 900,000 clients, which is 3% of its total clientele. The company also traced unauthorized downloads dating back to August 2018. UCPB Independence Day Cyber Attacks (2020) - The government-controlled United Coconut Planters Bank (UPB) lost millions of pesos through numerous online transfers and automated teller machine (ATM) withdrawals during the three-day holiday in June 2020. In one case, the culprits made 57 withdrawals from a single ATM, taking out its entire P4 million stock. The total losses amounted to P167 million. II. Technical problems: Since digital banking is highly dependent on electronic communication, any technical error or lack of connectivity has severe consequences. Banks must amp with technology to nd solutions that prepare them for such emergencies. EXAMPLE: Glitch Hits BPI Computer System - The Bank of the Philippine Islands said some automated teller machines (ATM), cash acceptance machines (CAM), point-of-sales (POS) and e-commerce debit transactions done between Dec. 30 and 31, 2022 were posted twice. lll. Changing banking landscape and customer expectations: With digital-only banks providing ef cient banking solutions, customer expectations and the industry landscape are changing rapidly. Merely having an online banking component is no longer enough for traditional banks. Digital Banking Products - Online Banking Platforms: These platforms provide customers with the ability to manage their bank accounts, view transaction history, check balances, and transter funds between accounts.Online banking platforms often have user-friendly interfaces and secure login processes. 4  fi fi fi fi fi fi  - Mobile Banking Applications: Mobile apps allow customers to access banking services through their smartphones and tablets. Ihese apps offer features such as mobile check deposits, account alerts, bill payments, and even cardless ATM withdrawals. - Digital Payments: Digital banking facilitates various types of digital payments, including peer-to-peer transfers, bill payments, and online shopping payments. Popular methods include digital wallets like PayPal, Venmo, and mobile payment systems like Apple Pay and Google ray. - Digital Savings and Checking Accounts: Many banks offer digital-only savings and checking accounts that can be opened and managed entirely online. These accounts often have competitive interest rates and fewer fees compared to traditional accounts. - Online Investment Platforms: Digital banking has expanded into investment services, offering online trading platforms and robo-advisors. These platforms allow customers to invest in stocks, bonds, mutual funds, and other investment products. - Personal Loans and Credit Products: Digital banks and ntech companies offer personal loans, credit cards, and other credit products that can be applied for and managed online. The application process is often streamlined and quicker than traditional methods. - Digital Financial Planning Tools: Some digital banking platforms provide tools for budgeting, expense tracking, and nancial planning. These tools help customers manage their nances more effectively. - Cryptocurrency Services: Some digital banks and ntech rms have integrated support for cryptocurrencies, allowing customers to buy, sell, and store digital assets like Bitcoin and Ethereum. - Digital Identity Veri cation: Digital banking services often incorporate advanced identity veri cation methods, such as biometric authentication ( ngerprint, facial recognition) and two-factor authentication, to enhance security. - Chatbots and Customer Support: Many digital banks use Al-powered chatbots to provide customer support and answer queries in real-time, enhancing the customer experience. TONIK BANK - Tonik Digital Bank Inc., commonly known as Tonik, launched in the Philippines in 2021. Its consumer products range from deposits, payments, debit cards, and loan offerings for individuals that was recently upgraded to service SMEs. - The Tonik Account is its main savings account with 1% savings rate per annum 5   fi fi fi fi fi fi fi fi  - Users can also elect for time deposits, which only pay out once they reach a pre- determined maturity period. This is where the most attractive 6% interest p.a. can be gained. - Tonik now offers both microloans of up to PHP 20,000 on exible repayment terms, as well as buy now, pay later (BNPL) terms of up to PHP 100,000 at partner stores, with a minimum 10% downpayment on a xed monthly interest rate of 4.5%. Overseas FilipinoBank - State-owned Overseas Filipino Bank (OFBank) was actually the rst to secure the BSP's digital bank license. - Overseas Filipinos can remit funds via a few ways, including Cash or Paymaya e- wallet direct transfers, Visa Direct, from overseas remittance centers. or from a foreign bank account. - OFBank is aiming to cater to accessible savings and digital loan needs of overseas Filipinos, including offering Visa debit cards linked to Peso savings accounts. - OFBank also offers lending programmes for overseas Filipinos looking to reintegrate in the Philippines, as well as business nancing for "capital building or operational expansion", facilitated by its parent LANDBANK. - OFBank is also the only one from the current digital banking players in the Philippines to offer securities investment among its products, with the ability to invest in top government bonds and treasury securities — again enabled by LANDBANK UnionDigital BANK - UnionDigital is also an offshoot of an established incumbent, this time UnionBank, the ninth largest bank in the Philippines by assets. - UnionDigital boasts PHP 20 billion in deposits and PHP 13 billion in loans by mid-2023 Its main savings account garners up to 4% interest p.a., and its time deposit fetches up to 6.75% p.a. - UnionDigital is actively establishing partnerships with players in various key industries in order to launch embedded banking products and services, such as bill payment capabilities. GO TYME BANK - GoTyme offers a at 4% p.a. interest rate for its savings account, as well as the ability to create up to ve separate, goals-based savings pockets called Go Save accounts. 6    fi fl fi fi fl fi  - And via a partnership with payment gateway PayMongo, GoTyme can now enhance access to small and medium-sized enterprise (SME) loans for up to PHP 500,000. maya BANK - Maya Bank is the digital banking arm of Voyager Innovations, launching alongside the Maya e-wallet at the same time it rebranded from PayMaya. - Maya Savings, powered by Maya Bank, Inc., offers retail customers savings with an interest rate of 4.5% per annum. - Maya Bank also provides a business deposit account, which can perform real-time transfers using PesoNet and InstaPay, at a business deposit interest rate of 2.5%. - Maya further offers personal loan and credit lines, with much lower requirements for personal credit, while personal loan requirements are slightly more stringent, but can qualify customers for up to PHP 250,000 instead of the maximum PHP 30,000 for the credit line. UNO Digital Bank - UNOAsia Pte Lid a Singapore-based nancial technology company. - UNO has the staple digital bank products including savings account with attractive 4.25% interest p.a. that is credited daily, time deposits with interest rate of up to 6.50% p..., and personal loans up to PHP 200,000 with low 1.79% interest rates. - UNO Debit Mastercard. The rst numberless card in the Philippines. Card details are stored inside the chip and are not visible on the card, making any lost or stolen card unusable. 7  fi fi  DIFFERENT CHANNELS OF DIGITAL BANKING Banking cards: Cards are not only used to withdraw cash but also enable other forms of digital payment. Cards can be used for online transactions and on Point of Sale (PoS) machines. Bank cards (also called payment cards, ATM cards, or cash cards) feature a suite of common , instantly recognizable traits: Standard dimensions (85.60 mm x 53.98 mm) Card number (16 digits) and expiration date displayed on card Issuer logo displayed on card (Visa, Mastercard, American Express, etc) 1. Credit cards A credit card is issued by a bank and, suggestively, acts as a line of credit (or loan) from the bank to you. With this card, you are only able to make payments up to a set monthly credit limit. With a credit card, you don't need to have funds in your bank account in order to make purchases. Every time you pay, the amount you spend will be deducted until you've reached your credit limit. Credit cards themselves come in a variety of categories, including: Rewards credit cards Balance transfer credit cards Secured credit cards Cash back credit cards Travel credit cards Zero percent APR credit cards Business credit cards Student credit cards Store credit cards Credit cards pros: Help with your credit history; Offer better protection against fraud; Cardholder's liability is limited in case of a stolen card or card data; Points and discounts when shopping. Credit cards cons: Possibility to accumulate debit and hence a negative impact on your credit scoring; High fees for certain operations such as ATM withdrawals; You pay an interest on the credit. UnionBank Rewards Credit Card Ideal for: Individuals who want rewards on their spending Minimum monthly income requirement: ₽15,000 8   Metrobank World Mastercard Ideal for: Individuals who enjoy premium travel and shopping perks Minimum monthly income requirement: ₽125,000 PNB Ze-Lo Mastercard Ideal for: First-time credit card users Minimum monthly income requirement: P10,000 Key features and bene ts: No annual fee for life No late payment and overlimit fees Lower minimum amount due Globally accepted Fees and charges: Interest rate: 2.5% Late payment fee: None Overlimit fee: None Foreign currency transaction fee: 2.5% Payment Networks Payment networks are systems or platforms that facilitate the transfer of money between individuals, businesses, and nancial institutions. They enable the processing of transactions such as credit card payments, debit card payments, and online transfers by providing the infrastructure and rules needed for these transactions to occur smoothly and securely. Types of Payment Networks: 1. Card Networks: These are networks used by credit and debit card issuers to process transactions. Examples: Visa: One of the largest payment networks globally, Visa processes transactions for its cardholders. Visa Inc. is a multinational nancial services corporation headquartered in Foster City, California, USA. It was founded in 1958 as BankAmericard, the rst general- purpose credit card, and later became Visa in 1976. Function: Visa does not issue credit or debit cards directly to consumers. Instead, it partners with nancial institutions (banks and credit unions) that issue Visa- branded cards. When a cardholder makes a purchase, Visa's network facilitates the transaction by securely transmitting information between the cardholder's bank (the issuer) and the merchant's bank (the acquirer). Mastercard: Another major payment network, Mastercard operates similarly to Visa, providing the infrastructure for processing payments. 9  fi fi fi fi fi  Mastercard Incorporated, commonly referred to as Mastercard, is a global nancial services company headquartered in Purchase, New York, USA. Founded in 1966 as Interbank and later renamed Master Charge, it became Mastercard in 1979. Function: Like Visa, Mastercard partners with nancial institutions to issue cards that carry the Mastercard brand. Mastercard operates a global payment network that processes transactions between the issuer and acquirer when a cardholder makes a purchase. American Express: Unlike Visa and Mastercard, American Express issues its own cards and operates its own payment network. American Express Company (Amex) is headquartered in New York City and was founded in 1850. It started as an express mail business before evolving into nancial services, including travelers' cheques and charge cards. Function: American Express issues its own cards and also operates the payment network that processes transactions for these cards. This means that Amex handles the entire process from card issuance to transaction processing, which gives it more control over the customer experience and the services it offers. BancNet BancNet is the largest interbank network in the Philippines, connecting over 120 member banks, non-bank nancial institutions, and electronic money issuers. BanNet supports ATM transactions, online banking, electronic funds transfers (EFT), and bills payments. It also facilitates real-time debit card transactions. 2. Real-Time Payment Networks These networks facilitate instant or near-instant payments. Real-time payment networks in the Philippines enable instant or near-instantaneous electronic fund transfers between banks, e-money issuers, and other nancial institutions. These networks are part of the country's push towards a more digital and cashless economy, supported by the Bangko Sentral ng Pilipinas (BSP) through the National Retail Payment System (NRPS). InstaPay InstaPay is a real-time electronic fund transfer service that allows individuals and businesses to send and receive funds across participating banks and non-bank e- money issuers in the Philippines. It is part of the NRPS framework. Users can transfer funds up to PHP 50,000 per transaction, with the money credited instantly to the recipients account. The service operates 24/7, including weekends and holidays. PESONet 10 fi  fi fi fi fi  is another electronic fund transfer service under the NRPS, but it operates on a batch processing basis rather than in real-time. However, it is still a critical part of the payment ecosystem, especially for larger transactions While not strictly real-time, PESONet allows funds to be transferred within the same banking day, making it faster than traditional clearing methods. It's used for transactions that do not require immediate settlement. PESONet is often used for payrolls, supplier payments, business transactions, and other larger or recurring payments. QR Ph is the national QR code standard for digital payments in the Philippines, which allows for real-time payments through QR code scanning. It is part of the BSP's efforts to standardize and promote the use of QR codes for payments. Users can make real-time payments by scanning a QR Ph code displayed by a merchant or another individual, regardless of the nancial institution they use. This interoperability is a key feature, enabling seamless payments across different banks and e-money issuers 3. Mobile Payment Networks These include platforms that allow users to make payments through mobile devices. Examples: Apple Pay: A mobile payment and digital wallet service that allows users to make payments using their Apple devices. Google Pay: A similar service to Apple Pay, allowing payments via Android devices. Samsung Pay: A mobile payment solution available for Samsung devices. GCash GCash is the leading mobile wallet in the Philippines, operated by Mynt (Globe Fintech Innovations, Inc.), a joint venture of Globe Telecom, Ant Group, and Ayala Corporation. Features: Money Transfer: GCash allows users to send money to other Cash users or to any bank account in the Philippines. Bill Payments: Users can pay for utilities, government services, tuition, and more directly from the app. Purchases: GCash supports QR code payments at various merchants, online shopping, and in-app purchases. Savings and Investments: GCash also offers a savings account (GSave) and investment options (GInvest) directly within the app. GrabPay GrabPay is the mobile wallet of Grab, a popular super app in Southeast Asia. 11  fi  In the Philippines, GrabPay is used for various nancial transactions within the Grab ecosystem and beyond. Features: Ride Payments: Users can pay for Grab rides using GrabPay. Food and Grocery Deliveries: GrabPay can be used to pay for food and grocery deliveries through GrabFood and GrabMart. Money Transfer: GrabPay users can transfer funds to other GrabPay users or withdraw to bank accounts. In-Store and Online Payments: GrabPay is accepted at partner merchants for QR code payments and online transactions. Coins.ph Coins.ph is a mobile wallet and cryptocurrency exchange platform. It was one of the rst mobile wallets in the Philippines. Features: Money Transfer: Users can transfer money to other Coins.ph users, bank accounts, or via remittance centers. Bill Payments: Coins. ph supports bill payments for utilities, government services, and more. Cryptocurrency: Users can buy, sell, and store cryptocurrencies like Bitcoin directly within the app. Mobile Load: Coins. ph also allows users to purchase mobile load for any network in the Philippines. ShopeePay ShopeePay is the mobile wallet integrated into Shopee, one of the leading e- commerce platforms in Southeast Asia, including the Philippines. Features: Online Shopping: ShopeePay can be used to pay for purchases on the Shopee platform, often with added discounts and cashback offers. Money Transfer: Users can transfer funds to other ShopeePay users or withdraw to bank accounts. Bill Payments: ShopeePay supports bill payments and mobile load purchases. Of ine Payments: Users can pay for purchases at partner stores using ShopeePay QR codes. Lazada Wallet Lazada Wallet is the mobile wallet integrated into Lazada, another major e-commerce platform in Southeast Asia. Features: Online Shopping: Lazada Wallet is used for making payments on the Lazada platform, with bene ts like instant refunds and special promotions. Money Transfer: Users can top up their wallet using bank transfers or over-the- counter methods. 12 fi  fl fi fi  Bill Payments: Some bill payments and top-ups are available through Lazada Wallet. PayMaya PayMaya is a mobile wallet and payments network operated by Voyager Innovations, which is a subsidiary of PLDT. It provides a wide range of digital nancial services. PayMaya users can pay bills, send money, shop online, and make payments using QR codes. It also offers virtual and physical prepaid Visa and Mastercard cards. Other payment networks Dragonpay Dragonpay is a payment gateway that allows businesses to accept various forms of payments, including online banking, over-the-counter payments, and mobile wallets. Dragonpay provides an alternative payment system for e-commerce, allowing customers to pay through their preferred banking or payment method. Bayad Center Bayad Center is a payment collection service that bayad operates both physical branches and an online platform, allowing customers to pay bills, government dues, and other services. Customers can pay for utilities, insurance, loans, tuition, and more through Bayad Center's extensive network of partner outlets and online services. 7-Eleven CLIQQ CLIQQ is the digital payment service of 7-Eleven stores in the Philippines, offering a convenient way to pay bills and buy e-money or load. Through CLIQQ kiosks and the mobile app, users can pay bills, transfer money, and purchase goods or services. 2. Debit cards - A debit card is linked to your current bank account or checking account. Unlike a credit card, a debit card enables you to pay by deducting money from the associated account. - This means you can only spend or withdraw funds that you already own. Pros of using Debit Cards Convenience - With a debit card, you don't have to carry a lot of cash with you. This is especially a great advantage when paying for purchases one after the other. Can be used to store emergency fund - A debit card can be a great way to keep your emergency fund safe while giving you the ability to access the money any time you need to. 13  fi  Secure - Debit cards are very secure since you have to enter a pin or sign every single time you make a transaction. This makes it safe from being misused. Should your card be lost or stolen, you can easily get it canceled by reporting the loss to your bank Easy to get - Getting a debit card is easy, and is often available upon opening a new bank account, It doesn't require you to go through lengthy applications and endless credit checks. Great for budgeting - Because the money you spend goes directly from your bank account, it's easier to track your expenses and manage your budget. A lot of people also prefer debit cards because there's no risk of overspending. No interest charges - Unlike credit cards, there are no interest charges with debit cards.The money you spend is the exact amount that you will get charged. Cons of using Debit Cards Doesn't impact your credit score - When you use a debit card, the transaction is monitored by your bank. However, since no money is being borrowed, the transaction does not affect your credit score. Has a spending limit - A debit card is linked to your checking account. This means that you have to follow the daily spending limit of your account. Can be targeted by scams - Using a debit card can be risky as it provides more information than other payment methods. A fraudulent merchant or a computer virus can read your card number and other information from your card. 14   BDO Debit Card Initial deposit: P2,000 Daily withdrawal limit: P50,000 per day, P25,000 maximum amount per single transaction on BDO ATMS, and P10,000 for other ATMs Security Bank EMV Everyday Debit Card Comes with free life insurance with no medical exams required You get a passbook and checkbook with your card Initial deposit: P5,000 Daily withdrawal limit: P50,000 Maintaining balance: P25,000 BPI Debit Mastercard International debit acceptance and cash withdrawal (from any Bancnet and Mastercard af liated ATMs) Account linking Shop and pay in-stores and online Tap to pay Discounts and vouchers from establishments such as Zara, Shipping Cart, Agoda, and many more 3. Prepaid Cards A prepaid card is a card that you can use for purchases after you deposit money onto it. It is classi ed into two types: non-reloadable and reloadable. The former is disposable and cannot be used again once consumed, while the latter can be used as long as you continuously load credits onto it. This article will talk about reloadable prepaid cards and the best ones available in the market. Prepaid Card vs. Debit Card vs. Credit Card - The main difference between a prepaid card and a debit card is that the former is not connected to a bank account. - Also, you have to load the funds you are going to spend in advance. And typically, you won't be able to spend more than the money you've loaded onto it. The credit card, which as its name implies, is used to buy things on credit and therefore do not need funding before use. Prepaid card pros: No possibility of overspending or debt; No need to open a bank account; Can be recharged and reused. Prepaid card cons: 15  fi fi  Fees for almost any operation (activation, reloading, purchases, withdrawals, etc); Might not be accepted by certain merchants. PAYMAYA Features: Free load-up's at 7-Eleven, SM Stores, Unionbank, Bayad Centers, and more Mobile app to easily manage and transfer funds Honored at all MasterCard & Visa merchants Can be used in the Philippines and abroad Easy bills payment through app GCash Mastercard Features: Syncs to your Globe GCash account Get "Beep" functionality for an additional PHP 210 per card Accepted at most merchant through Mastercard network Pay bills directly from your app Allows access of PayPal balance via GCash app BPI Amore Visa Prepaid Features: Earn points you can exchange for exclusive rewards at Ayala Malls No maintaining balance and no loading fees required Add "Beep" to your card for an additional PHP 50 Load up to PHP 100,000 through loading partners Has a monthly maintenance fee of PHP 100 YAZZ Features: Can be used at most merchants through the Visa network Card is free of charge upon issue Top-up at most SM outlets; loading fee of PHP 20 PHP 50 consumable starting balance 4. Virtual cards Virtual cards are digital versions of physical payment cards, typically used for online transactions. They are linked to your existing credit, debit, or prepaid account but have unique card numbers, expiration dates, and CVV codes, which are different from your physical card's details. The main difference between virtual payment cards to physical ones is you don't have to go to a bank to make an account. Instead, all you need to do is go to their website and apply for a virtual card. 16   Top Virtual Pay Cards in the Philippines 1. Maya Virtual Card - Like Gash, Maya is among the most used e-wallet in the Philippines. With Maya, you can pay bills, make online purchases, and cash in anywhere. 2. GoTyme Virtual Card 3. Tonik Virtual Debit Card - Tonik has become one of the most in-demand digital-only banking platforms in the country thanks to its innovative and easily accessible offers. 4. GCash AMEX Virtual Pay - GCash American Express Virtual Pay is a reloadable digital wallet that lets you purchase online and checkout for memberships on sites like Amazon, Lazada, Net ix, Spotify, and more. 5. Grab Pay Card - GrabPay is a digital payment wallet integrated into the Grab application that allows you to pay for Grab operations without leaving the app. 6. UnionBank Go Rewards Prepaid Virtual Card - In recent years, UnionBank has immensely stepped up its offers, especially when it comes to giving its clients accessibility and convenience. - The UnionBank Go Rewards Prepaid Virtual Card has tons of perks powered by Go Rewards. This Lifestyle Rewards Program offers rewards and experiences can be availed through partners such as Caltex, Cebu Paci c, Robinsons Retail, and more. 7. BDO Virtual Card - Banco de Oro (BDO) is one of the most prestigious banks in the Philippines. - Aside from their wide selection of accounts, (debit, savings, etc.,) the company also offers the BDO Virtual Card to their clients, which is an excellent card for online shopping. 8. BPI Virtual Card - Bank of the Philippine Islands (BPI) is one of the top banks in the Philippines, trusted by many Filipinos. This is because they have some of the best credit and debit card offers and savings accounts for young aduits, adults, and businesses. 9. CIMB Virtual Card - Established in 2018 CIMB has been supporting Filipinos by helping them reach their nancial goals through banking. - In under four years, CIMB has been recognized as an industry leader in the digital banking space. The Bank has received 79 awards from various local and international award-giving institutions, including The Asian Banker, The Asset, International Finance, and Global Banking and Finance Review. 10. UnoBank Virtual Debit Card - UnoBank Virtual Debit Card is the key to simpli ed savings and convenience when it comes to paying online. - With this virtual debit card, you can effortlessly send money, pay bills, and shop online, all while your money grows with a competitive interest rate of up to 4.25% 17 fi  fi fi fl  5. Gift cards Similar to prepaid cards, gift cards are also pre-loaded with funds. What makes a gift card different is that once the money is spent, you cannot reload a gift card and you can no longer use it. Gift cards also have shorter expiration dates than prepaid cards. Gift cards were originally issued by a store and could only be used in that particular location (known as closed loop gift cards). 1. Retail Gift Card - Retail gift cards are the type of gift card that is majorly provided by a certain retail store or chain of stores. These types of gift cards can only be redeemed at the store that offers them. - They are a great alternative to gifts. Recipients of the gift cards have the freedom to redeem them for items sold by those retailers. Popular retail stores in the Philippines include SM department stores, Ayala Malls, Lazada, and Jollibee. 2. E-Gift Card - E-gift cards are also digital/virtual gift cards. Upon purchase, they will be delivered via your mail. You can purchase egift cards from both retailers and service providers in the Philippines. They are a great alternative if you can't physically present your recipient with a gift. If you are a typical online shopper, e-gift cards are ideal for you. Great examples include Steam gift cards, Apple gift cards, etc. 3. Multi-Brand Gift Card - Multi-brand gift cards are the types you can use at various brands. They offer so much exibility as to where they can be redeemed. You can also gift your loved ones this type of gift card. The recipients can choose to redeem the gift card at any of the brands. Examples of these brands include GCash and Giftaway. Gift cards like Visa gift cards and American Express gift cards are also good examples. 4. Restaurant Gift Card - Restaurant gift cards are majorly used at the restaurant or chain of restaurants that offer them. If you love food like me, then this type of gift card is for us. Several restaurants based in the Philippines offer gift cards for customers. They include Jollibee, Max, and Shakey's. 5. Experience Gift Card - Experience gift cards are speci c gift cards that can afford you a special experience. Experiences like a concert, cooking class, or spa day. This type of gift card is so ideal if you want to give your recipient a memorable experience. 18  fl fi  2. Unstructured Supplementary Service Data (USSD): Unstructured Supplementary Service Data (USSD): is a communications protocol used in GSM networks for sending short text messages. USSD is similar in format to SMS. However, it is an instant messaging service, so messages are not stored on the operator side or on the subscriber's device. SMS banking solutions can be used in the following ways: Notify consumers instantly of account transactions Send payment reminders Allow customers to monitor their account activity Use one time passwords to reduce fraud and Generate real-time fraud alerts Reduce defaulting on loan payments 3. Uni ed Payments Interface (UPI): A popular mobile payment method that allows you to transfer funds from one bank account to the other, instantly and free of charge. Ever since its inception, UPI has made nancial transactions much easier for account holders. UPl is a single-window mobile payment system created by the National Payments Corporation of India (NPCI). It makes sending money simpler as it removes the need to enter bank details and other personal information when making transactions. In the Philippines, a uni ed digital payments system exists, known as InstaPay and PESONet, which are part of the National Retail Payment System (NRPS) implemented by the Bangko Sentral ng Pilipinas (BSP). 4. Mobile Wallets Mobile wallets have eliminated the need to remember four-digit card pins or enter CVV details or carry loose cash. Mobile wallets store bank account and card credentials to easily add funds to the wallet and make payments to other merchants with similar applications. Example: Gcash, Paymaya, coins.ph, bao pay 5. PoS terminals: Typically, PoS machines are portable devices that read a card to authorize and complete the payment. Supermarkets and gas stations opt for this method of payment. What is a point of sale transaction? In banking, PoS stands for Point of sale. It refers to the speci c location where a transaction is completed. Whether you're buying groceries, paying for fuel or dining at a restaurant, the PoS system ensures that your payment is processed quickly and securely. 19  fi fi fi fi  A PoS transaction occurs when you complete a purchase using a Debit or Credit Card at a retail location. PoS systems include hardware like card readers and software for transaction processing. Key features of a PoS system PoS transactions are designed to be swift and ef cient, reducing customer wait times and enhancing the overall shopping experience. The primary functions of a PoS system include: Processing payments: PoS systems support various payment methods, including Credit and Debit Cards, mobile payments and digital wallets. This versatility ensures you can pay using your preferred method, enhancing your shopping experience. Issuing receipts: Modern Pos systems generate digital and paper receipts, offering convenience to customers and ensuring accurate record-keeping for businesses. Tracking sales: PoS systems provide businesses with detailed sales data, useful for inventory management, sales forecasting and customer relationship management (CRM). This data-driven approach helps businesses make informed decisions and improve operational ef ciency. Product management: By integrating with inventory management systems, PoS solutions help businesses track stock levels, set reorder alerts and manage product information ef ciently. Customer management: PoS systems often include CRM capabilities, enabling businesses to track customer purchase preferences and contact information. This aids in personalised customer service and targeted marketing campaigns. Reporting: PoS systems generate detailed reports on sales, expenses and pro ts, providing businesses with accurate nancial data essential for budgeting, tax preparation and nancial analysis. How does a PoS transaction work? Adding products: Once you select your desired products, a barcode scanner is used to add these items to your shopping cart. Calculating total: Once all items are scanned, the PoS system calculates the total cost and updates the inventory to re ect the sale. Any applicable promotions or discounts are applied at this stage. Processing payment: You can then make the payment using your preferred method. Generating receipt: Upon completion of the transaction, the PoS system generates a receipt for the customer. Types of PoS transactions 1. Contactless payments (NFC) Near Field Communication (NFC) technology allows for contactless payments. You can simply tap your card or mobile device on the PoS terminal. This method is fast and secure, and is gaining popularity owing to its convenience. 2. Mobile wallet transactions 20  fi fi fi fi fl fi fi  Mobile wallets enable you to store your card details on your smartphone. Transactions are completed by holding the phone near the PoS terminal, making the process quick and secure. 6. Automated teller machine (ATM) ATMs are machines that dispense cash and allow you to make other banking transactions. An ATM typically consists of a screen, a card reader, a keypad, a cash dispenser and a printer. Using an ATM simply involves inserting your bank-issued ATM card, entering your personal identi cation number (PIN) and following the prompts on the screen to complete your desired transaction. Examples of ATM transactions Withdrawing cash The most common ATM transaction is the withdrawal of funds from one's account. Banks typically impose limits on the maximum amount that can be taken out each day. This amount can vary from bank to bank, as well as among different accounts offered by a single bank. Balance inquiry You can check your account balance to see how much money is available in your account. Change PIN You can change your PIN (personal identi cation number) at some ATMs. Biometric ATM A Biometric ATM is an advanced automated teller machine that utilizes biometric authentication methods to authenticate users based on one or more physical or behavioral characteristics, ensuring a secure, personalized, and ef cient banking experience. A biometric ATM leverages biometric technologies such as ngerprint recognition, facial recognition, iris scanning, and voice recognition to authenticate a customer's identity, allowing them to make a range of ATM services such as cash withdrawals, deposits, balance inquiries, fund transfers, bill payments, and even more intricate nancial services like loan applications and account management. Biometric Authentication: The Core of Biometric ATMs a. Fingerprint authentication based ATMs: Through advanced ngerprint scanners, these ATMs integrate a ngerprint sensor module to analyze the unique patterns of a user's ngerprint. This method is not only quick but also highly secure, given the distinctiveness of each individual's ngerprint. 21  fi fi fi fi fi fi fi fi fi  b. Voice recognition enabled ATMs: Biometric ATMs can identify users through their vocal characteristics and patterns, captured via integrated microphones. This method not only ensures security but also aids users with physical disabilities, offering an alternative mode of authentication. c. Facial recognition based ATMs: By harnessing cutting-edge facial recognition technology, Biometric ATMs can swiftly identify customers based on distinct facial features. This offers a hands-free authentication process, enhancing user convenience. Micro ATM - Micro ATM or Mini ATM machine is a portable, handheld card swipe terminal used to dispense cash, in locations where bank ATMs cannot reach. A Mini ATM operates as a unique "Bank-in-a Box", allowing customers to withdraw cash and know their balance. This payment solution is aimed at taking branchless banking to the last mile. 7. CDM or Cash Deposit Machine: - performs the opposite function of an ATM or Automated Teller Machine; CDM machine accepts deposits against a customer's bank account instead of dispensing cash from the same account. - CDMs are freestanding kiosks that may be wall mounted as well, and they have a very similar interface and user experience to more recent iterations of the ATM. 8. Cash Re-cyclers: - A teller cash recycler (TCR) machine is a unit that bank tellers use to quickly count incoming cash. These units are available in a range of different designs, from standard models to high-capacity or ultra-quick machines. Usually, you'll nd them behind the teller counter, though they are also popular with companies that do a large part of their business in cash. The teller simply inserts a stack of bills, and they are counted, separated by denomination, and stored in cash cassettes within the machine's secure safe area. How does a cash recycler work? - Here is an overview of the steps involved in the cash recycling operation: - Deposit cash: Users put money into the cash recycler machine, where it is counted and recorded. Authentication: The cash recycler veri es the authenticity of money using advanced sensors and security checks. Storage: Validated cash is stored securely in separate cassettes (see below) based on the value of denominations. Withdrawal: When dispensing cash, the recycler calculates the optimal combination of bills and coins from its inventory needed to meet withdrawal requests. Transaction recording: All transactions are logged, providing an accurate record for auditing and reconciliation. Recycling: The recycler re-uses the deposited cash for subsequent transactions. 22  fi fi