BancNet Payment System
Encyclopedia
The BancNet
(BN) Point-Of-Sale System is a local PIN-based electronic funds transfer
(EFTPOS) payments solution operated by BancNet on behalf of the member banks and China UnionPay
(CUP). The BN POS
System allows merchants to accept the ATM cards of any active BancNet member bank as payment for goods or services and obliges BN to settle the transaction as early as the following banking day through a direct deposit to a settlement account with any member bank. Acceptance of CUP cards is presently limited to SM Prime Holdings, Inc.'s Department Store, Supermarket, Hypermarket, Super Sale, Watson's, Sports Central, SM Appliance, Toy Kingdom, and select Surplus Stores.
), maintains toll free connections for provincial merchants (PLDT, Innove (Globe Telecom
) and Digitel) and performs actual transactions settlement (finance)
(through the BN depository bank
). To support the installations, BN provides maintenance, cashier orientation, and a 24 x 7 merchant helpdesk services, as well as daily electronic data processing
, like transactions reporting and reconciliation.
In each accredited retail location, a terminal is installed. The terminal also connects to the member banks through the BancNet switch using the public phone system.
The operation is rudimentary: the cashier swipes a customer's ATM card on the terminal and keys in payment amount. The cardholder then selects his bank account and keys in the ATM Personal identification number
(PIN). If the requested amount is successfully debited from the customer's account, receipts will be printed for both the customer and retailer.
BancNet does not charge rental or membership fees for retail merchants; instead, it charges interchange fees or a merchant discount rate for every successful debit transaction coursed through its system. Currently, BancNet's average merchant rate is about 1.0% net, while the average Visa/MasterCard credit and signature debit card merchant rate is about 2.5%, exclusive of the 1/2 of 1% creditable withholding tax. Some merchant sectors, such as food wholesalers and gasoline stations, have special reduced rates to accommodate business needs and profit margins.
BancNet introduced the BancNet Rewards Points program on August 15, 2009, the first points-based rewards system exclusively for debit purchases in the country. Every Php 25 in spend using an ATM Debit or prepaid card of a member bank earns the cardholder 1 point. A total of 2,000 points are needed to redeem the cash rebate of Php 100. The Rewards Points program runs through September 15, 2011.
Supermarket. Given this was the second payment service enabled by BN (with Bill (payment)
on the ATM
launched the year before), the brand BancNet Payment System (BPS) was coined at around the same time. It was decided in 2006 to do away with the independent brand given that the name BancNet has since developed a market cachet. In this way, the new marketing tagline
of Pay Bills.Buy Things.Transfer Funds. supplements the official corporate identifier of Non-Stop Banking Network on marketing materiel.
The primary reason for the launch of the service was to become the terminal provider of the credit card operations of the member banks. At the time, Phil Commercial & International Bank (PCIB) - Bankard
, Citibank
, Rizal Commercial Banking Corporation
, and Unicard (Metrobank
) were major issuers of both branded and proprietary credit cards. The heady days of the early 90's saw a dramatic increase in credit card issuance and the member banks needed a way to expand without expending much capital. The model of shared ATM operations was then applied to the POS. Debit
was treated as a pleasant side-effect of the terminal operations.
The member banks saw an opportunity to expand even faster in 2000 when talks for a broader-based consortium were started. The objective was ostensibly to compete against what was then seen as the hegemony of Equitable Card Network, Inc. (ECNI) in terminal operations. Negotiations went far enough that BN invested in office space in 139 Corporate Center. The consortium arrangement fell through in 2003 when foreign issuers backed out.
BN developed a better appreciation for the potential of debit especially at the turn of the new century. Growth has averaged 68% since launch, peaking at 71% between 2000 and 2001. A marketing/business development organization was created in 2002, with a product manager coming on board in 2003.
The BN Bills Payment facility has been extended on the POS since late 2007. To-date, forty six of the more than seventy billers available on the ATM are also on the POS channel. This is currently in use for member banks but BN may offer terminals to biller partners and merchants as their in-house collection service.
Cash withdrawal on the POS was launched in early 2008. The BN POS terminal may now be used to authorize cash withdrawals at key merchants like M. Lhuillier, a local pawnshop with over 1,000 locations nationwide. Cardholders will be charged P10.00 for every withdrawal; the merchant-partner may also impose an additional "convenience fee" for the transaction.
EPS, and Megalink
Fastlink are direct competitors. In reality though there is very little overlap in their respective constituencies given that 50% to 60% of all ATM cards issued in the country are for payroll. Cash is the true competition of electronic payment systems. According to a study by Intuition, commissioned by VISA
Asia-Pacific, cash still accounts for 80% of all transactions in the region. This is in contrast to the situation in the United States
where debit transactions outnumber cash purchases with the former accounting for 35% of total buy.
BancNet signed a Memorandum of Agreement with both Banco de Oro (a member bank of both Expressnet and Megalink) and Bank of the Philippine Islands
(operator of Expressnet) for terminal sharing. However, internal settlement arrangements within each consortium are followed despite the terminal arrangements; e.g., BancNet POS transactions may still only be settled with a member bank. But this stipulation is reportedly under review as the BancNet POS is now being considered for the collection requirements of government agencies and government controlled entities. In this case, a non-member bank acts as the depository while the BancNet treasury bank acts as the collecting bank.
BancNet
Bancnet, Inc. is a Philippine-based interbank network connecting the ATM networks of more than forty local banks. It is considered the largest interbank network in the Philippines in terms of the number of member banks and annual transactions...
(BN) Point-Of-Sale System is a local PIN-based electronic funds transfer
Electronic funds transfer
Electronic funds transfer is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems....
(EFTPOS) payments solution operated by BancNet on behalf of the member banks and China UnionPay
China UnionPay
China UnionPay , also known as UnionPay or by its abbreviation, CUP, is the only domestic bank card organization in the People's Republic of China . Founded in March 2002, China UnionPay is an association for China's banking card industry, operating under the approval of the People's Bank of China...
(CUP). The BN POS
Point of sale
Point of sale or checkout is the location where a transaction occurs...
System allows merchants to accept the ATM cards of any active BancNet member bank as payment for goods or services and obliges BN to settle the transaction as early as the following banking day through a direct deposit to a settlement account with any member bank. Acceptance of CUP cards is presently limited to SM Prime Holdings, Inc.'s Department Store, Supermarket, Hypermarket, Super Sale, Watson's, Sports Central, SM Appliance, Toy Kingdom, and select Surplus Stores.
Systems Components
The service has two major components: the infrastructure and the support services. BancNet deploys credit authorization terminals with requisite supplies, provides store signage (or point of sale displayPoint of sale display
A point-of-sale display is a specialized form of sales promotion that is found near, on, or next to a checkout counter . They are intended to draw the customers' attention to products, which may be new products, or on special offer, and are also used to promote special events, e.g. seasonal or...
), maintains toll free connections for provincial merchants (PLDT, Innove (Globe Telecom
Globe Telecom
Globe Telecom , commonly known as Globe, is a telecommunications company in the Philippines. Globe provides mobile, fixed line, and broadband Internet services.- History :In 1928, Congress passed Act No...
) and Digitel) and performs actual transactions settlement (finance)
Settlement (finance)
Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against payment of money, to fulfill contractual obligations, such as those arising under securities trades....
(through the BN depository bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
). To support the installations, BN provides maintenance, cashier orientation, and a 24 x 7 merchant helpdesk services, as well as daily electronic data processing
Electronic data processing
Electronic Data Processing can refer to the use of automated methods to process commercial data. Typically, this uses relatively simple, repetitive activities to process large volumes of similar information...
, like transactions reporting and reconciliation.
In each accredited retail location, a terminal is installed. The terminal also connects to the member banks through the BancNet switch using the public phone system.
The operation is rudimentary: the cashier swipes a customer's ATM card on the terminal and keys in payment amount. The cardholder then selects his bank account and keys in the ATM Personal identification number
Personal identification number
A personal identification number is a secret numeric password shared between a user and a system that can be used to authenticate the user to the system. Typically, the user is required to provide a non-confidential user identifier or token and a confidential PIN to gain access to the system...
(PIN). If the requested amount is successfully debited from the customer's account, receipts will be printed for both the customer and retailer.
BancNet does not charge rental or membership fees for retail merchants; instead, it charges interchange fees or a merchant discount rate for every successful debit transaction coursed through its system. Currently, BancNet's average merchant rate is about 1.0% net, while the average Visa/MasterCard credit and signature debit card merchant rate is about 2.5%, exclusive of the 1/2 of 1% creditable withholding tax. Some merchant sectors, such as food wholesalers and gasoline stations, have special reduced rates to accommodate business needs and profit margins.
BancNet introduced the BancNet Rewards Points program on August 15, 2009, the first points-based rewards system exclusively for debit purchases in the country. Every Php 25 in spend using an ATM Debit or prepaid card of a member bank earns the cardholder 1 point. A total of 2,000 points are needed to redeem the cash rebate of Php 100. The Rewards Points program runs through September 15, 2011.
History
The first merchant accreditation contract was signed on May 6, 1994 with Rustan's Corp. but the service was first made available later that year at the Robinsons GalleriaRobinsons Galleria
Robinsons Galleria is a large shopping mall located at EDSA corner Ortigas Avenue, Quezon City just near SM Megamall. It is Robinsons' flagship mall. The mall is owned by John Gokongwei, founder of JG Summit Holdings and Robinsons Land Corp. It was built in 1990 with a total gross floor area of...
Supermarket. Given this was the second payment service enabled by BN (with Bill (payment)
Bill (payment)
A bill or invoice is a document requesting payment for an order previously supplied. Presentation of a bill is common practice on the part of credit card companies, utilities, and other service providers...
on the ATM
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
launched the year before), the brand BancNet Payment System (BPS) was coined at around the same time. It was decided in 2006 to do away with the independent brand given that the name BancNet has since developed a market cachet. In this way, the new marketing tagline
Tagline
A tagline is a variant of a branding slogan typically used in marketing materials and advertising. The idea behind the concept is to create a memorable phrase that will sum up the tone and premise of a brand or product , or to reinforce the audience's memory of a product...
of Pay Bills.Buy Things.Transfer Funds. supplements the official corporate identifier of Non-Stop Banking Network on marketing materiel.
The primary reason for the launch of the service was to become the terminal provider of the credit card operations of the member banks. At the time, Phil Commercial & International Bank (PCIB) - Bankard
Bankard
Bankard is one of the largest credit card issuers in the Philippines, issuing VISA, MasterCard, JCB and CUP credit cards. It also issued its own line of credit and debit cards in the 1990s.-About Bankard:...
, Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
, Rizal Commercial Banking Corporation
Rizal Commercial Banking Corporation
The Rizal Commercial Banking Corporation was established in 1960 as a development bank and is licensed by the Bangko Sentral ng Pilipinas for both commercial and investment banking...
, and Unicard (Metrobank
Metrobank
Metrobank can refer to:*Metropolitan Bank and Trust Company , a Philippine bank*MetroBank, the subsidiary of MetroCorp Bancshares, an American bank based in Houston, Texas* Metro Bank , a British retail bank established in 2010...
) were major issuers of both branded and proprietary credit cards. The heady days of the early 90's saw a dramatic increase in credit card issuance and the member banks needed a way to expand without expending much capital. The model of shared ATM operations was then applied to the POS. Debit
Debit
Debit and credit are the two aspects of every financial transaction. Their use and implication is the fundamental concept in the double-entry bookkeeping system, in which every debit transaction must have a corresponding credit transaction and vice versa.Debits and credits are a system of notation...
was treated as a pleasant side-effect of the terminal operations.
The member banks saw an opportunity to expand even faster in 2000 when talks for a broader-based consortium were started. The objective was ostensibly to compete against what was then seen as the hegemony of Equitable Card Network, Inc. (ECNI) in terminal operations. Negotiations went far enough that BN invested in office space in 139 Corporate Center. The consortium arrangement fell through in 2003 when foreign issuers backed out.
BN developed a better appreciation for the potential of debit especially at the turn of the new century. Growth has averaged 68% since launch, peaking at 71% between 2000 and 2001. A marketing/business development organization was created in 2002, with a product manager coming on board in 2003.
The BN Bills Payment facility has been extended on the POS since late 2007. To-date, forty six of the more than seventy billers available on the ATM are also on the POS channel. This is currently in use for member banks but BN may offer terminals to biller partners and merchants as their in-house collection service.
Cash withdrawal on the POS was launched in early 2008. The BN POS terminal may now be used to authorize cash withdrawals at key merchants like M. Lhuillier, a local pawnshop with over 1,000 locations nationwide. Cardholders will be charged P10.00 for every withdrawal; the merchant-partner may also impose an additional "convenience fee" for the transaction.
Competitive landscape
It is easy to generalize that BancNet, ExpressnetExpressnet
Expressnet is an interbank network connecting the ATM networks of seven major banks in the Philippines. It is the second-largest ATM network in terms of number of ATMs and the smallest in terms of customers and number of member banks...
EPS, and Megalink
MegaLink
MegaLink is an interbank network connecting the ATM networks of nineteen* members in the Philippines with a total of more than 2,921* ATMs nationwide and handling more than 795,000* transactions a day...
Fastlink are direct competitors. In reality though there is very little overlap in their respective constituencies given that 50% to 60% of all ATM cards issued in the country are for payroll. Cash is the true competition of electronic payment systems. According to a study by Intuition, commissioned by VISA
Visa
Visa or VISA may refer to:* Visa , a document issued by a country's government allowing the holder to enter or to leave that country...
Asia-Pacific, cash still accounts for 80% of all transactions in the region. This is in contrast to the situation in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
where debit transactions outnumber cash purchases with the former accounting for 35% of total buy.
BancNet signed a Memorandum of Agreement with both Banco de Oro (a member bank of both Expressnet and Megalink) and Bank of the Philippine Islands
Bank of the Philippine Islands
Bank of the Philippine Islands is the oldest bank in the Philippines still in operation and is the country's third largest bank in terms of assets, the country's largest bank in terms of market capitalization, and the country's most profitable bank...
(operator of Expressnet) for terminal sharing. However, internal settlement arrangements within each consortium are followed despite the terminal arrangements; e.g., BancNet POS transactions may still only be settled with a member bank. But this stipulation is reportedly under review as the BancNet POS is now being considered for the collection requirements of government agencies and government controlled entities. In this case, a non-member bank acts as the depository while the BancNet treasury bank acts as the collecting bank.