Government due diligence on fintech is needed – Manila Bulletin

The government should do due diligence on its fintech entrepreneurs during the current fintech boom and the rush to digitize, warned former congressman Jericho Nograles in a statement issued on Wednesday, October 26.

“The accelerated digital transformation requires the government to be more careful in performing due diligence on its potential partners,” Solon stressed. “The contractors and partners must be credible and have a clean track record.”

Needless to say, agencies that outsource digital transaction services to fintech players and digital banks should be thoroughly scrutinized since their business has financial implications and involves personal data, Nograles maintained.

Fintech companies and line agencies have bypassed procurement processes and charged consumers high prices.

Therefore, a repeat of last year’s PisoPay-Bureau of Quarantine fiasco should not happen, he stressed.

In November 2021, Nograles led the Congressional investigation into the irregular contract between BOQ and PisoPay, a fintech startup that offers remittances and money transfers.

BOQ contracted PisoPay to assist in the issuance of its International Certificate of Vaccination (ICV), commonly known as the “Yellow Card,” a requirement for outbound Overseas Filipino Workers (OFWs).

Filipinos applying for yellow cards shelled out P370 for a copy, of which P70 went to PisoPay.

The P70 service fee was considered irregular because other government agencies only charged P30.

During the series of congressional inquiries, Nograles and other lawmakers discovered that PisoPay did not go through the required bidding process.

In addition, PisoPay’s net financial capacity was insufficient. It was not qualified to enter into contracts with the authorities.

As a result, BOQ terminated the contract with PisoPay.

“The PisoPay-BOQ fiasco was a disservice to the Filipino people,” Nograles reiterated. – We should not let this happen again.

“The government must adapt to the demands of the new normal, but it must be careful in choosing its fintech partners.”

“While there are many credible players in the Philippines, there are also those who have proven that they are out to overcharge consumers for personal gain,” Nograles concluded.