RCBC On-Us Checks Accepted

We now accept on-us check deposits at RCBC branches. Please note that we only accept over-the-counter deposits at the "regular/commercial" RCBC branches. We do NOT accept deposits at RCBC Savings Bank, which is a separate bank independent of the universal/commercial bank.

Incorrect Time Printed on Metrobank Deposit Slips

Dragonpay users who choose to use Metrobank over-the-counter payments usually encounter a problem when validating their payments. The problem stems from the fact that the time that Metrobank prints on their deposit slip is oftentimes wrong. In most instances, they seem to print a time in the future (as far as 30 mins ahead in the future). Less often, its in the past (eg. 10 mins behind). And in a few instances, it actually prints the correct time.

Dragonpay's system is fully automated and its time is synchronized with the Atomic Clock time server used by the U.S. military, scientific and academic institutions. We suspect that Metrobank's back-end system is also synchronized with some external clock. In fact, there is no problem between our time and the time reported by Metrobank's back-end as our transactions data are consistent.

The only real problem is the time being printed on the deposit slip which is the basis of our users when validating their payment transaction. Because the time printed is often incorrect, our system replies by saying that it cannot find the deposit made at that time. This, in turn, worries our customers because they are sure they made the payment.

To avoid this problem, we encourage our customers to check the time at the branch's wall clock, or to check their own wrist watch when making the transaction. If the time printed on the deposit slip significantly varies from the time of your watch or the branch's clock (ex. more than 5 minutes apart), take note of the time on your watch/clock and use that instead when validating online with Dragonpay. You might also want to bring this to the attention of the branch officer.

Take note that this time problem does not happen at all Metrobank branches. There are some branches which seem to return the correct time. We suspect that the time being printed is based on the clock of the local PC of the teller instead of the back-end. So if the local PC time is incorrect, the time printed is also incorrect. Metrobank does not seem to do any time synchronization among its branch PC's.

On-Us Check Deposits Now Accepted

In our effort to accept more payment options for our merchants, we now support on-us check deposits aside from cash. The implementation is initially available to BDO, BPI, EastWest Bank, Metrobank and Unionbank over-the-counter payments.

On-us check deposit refer to checks that are issued by a local bank and are deposited in that same bank. For example, a Metrobank check that is deposited into Dragonpay's Metrobank bank account is considered an on-us check deposit. A Unionbank check that is deposited into Dragonpay's Unionbank account would likewise be considered as an on-us check deposit. But a Metrobank check deposited to Dragonpay's Unionbank account would not be considered as one.

The difference between a regular check deposit and an on-us check deposit is the latter is usually treated in the same way as a cash deposit. On-us checks are often not subject to the typical 3-day clearing of a regular local check from another bank.

It is curious to note that although Metrobank charges a handling fee for provincial cash deposits, they do not charge anything for provincial check deposits. So if you want to make a payment to a Dragonpay/PayEasy merchant and you are outside of Metro Manila, you are better off depositing a Metrobank/On-Us check to our bank account instead of using cash to avoid this bank fee. An alternative for Metrobank account holders is to ask the branch to perform a CREDIT MEMO or Direct Account Fund Transfer to avoid the cash handling fee.

BDO Retail Internet Banking Now Supported

BDO Retail Internet Banking (RIB) is the name of the Internet banking facility of Banco de Oro (BDO). Although BDO has one of the biggest depositor base, it has still has a relatively small user base for the Internet banking since they are a late-comer in the field.

BDO RIB will not win aesthetic design awards anytime soon, but its functional. It is also one of the most stable and has one of the highest uptime among the local Internet banking services. It has a complete range of features from basic balance inquiry to bills payment and fund transfers. BDO RIB is available for free to all regular, individual BDO account holders. It is not available, as of this writing, to BDO Cash Card users.

In addition to BDO Over-the-Counter payments, Dragonpay now supports RIB for online payments to Dragonpay or Mozcom PayEasy e-commerce merchants. To use Dragonpay with RIB, a one-time registration is necessary. Because of BDO's backlog, processing of registration can take up to 5 business days -- by far one of the slowest among local banks. We recommend that you register even if you do not have an immediate purchase requirement because of the delay.

BPI Express Online Now Supported

BPI Express Online (EOL) is the name of the Internet banking facility of the Bank of the Philippine Islands (BPI). It is one of the most widely-used online banking facility locally with a complete range of features from basic balance inquiry to bills payment and fund transfers. BPI EOL is available for free to all individual BPI account holders. Activation is easy and normally takes 1 to 2 business days only unlike other large local banks.






In addition to over-the-counter bank payments at BPI, Dragonpay now supports online payments from BPI EOL users. Using this service requires going through a one-time registration process. This process normally takes one business day only for BPI to complete. Customers who have plans of making purchases from Dragonpay merchants are encouraged to register ahead of time even if they do not have an immediate requirement to make a purchase. That way, when the time comes, they can immediately use their BPI EOL account to pay through Dragonpay.

RCBC Over-the-Counter Payments

In addition to online support for RCBC AccessOne Internet Banking, Dragonpay now also accepts over-the-counter deposits to any of RCBC's 300+ branches nationwide.

Customers who make purchases from Dragonpay-accredited merchants can pay through any RCBC branch even if they do not maintain an account with the bank. They just need to fill-up a deposit slip and validate their payment online. In most cases, validation is not even necessary as Dragonpay's system can automatically detect the deposit and advise the merchant in real-time.

RCBC charges handling fee for deposits made to to its smaller, satellite branches nationwide. But for its larger provincial branch office, the fee is waived. Customers are advised to check first with the branch whether they impose this fee for deposits to a Metro Manila bank account or not.

BPI Over-the-Counter Payments

Bank of the Philippine Islands (BPI) is one of the oldest commercial banks in the Philippines. It is consistently ranked as one of the Top 3 banks in terms of deposits, loans and capital accounts. It pioneered the Automated Teller Machine (ATM) in the country, and as of 2Q2009, it had the the most number of ATM's deployed at 1,573. It operates its own ATM network, called ExpressNet, independent of the BancNet and MegaLink ATM consortiums. It also had the largest branch network at 827, which has no doubt increased by several more as of this posting.

BPI is owned by the Ayala Group whose business interests include real estate (Ayala Land), telecommunications (Globe Telecoms / Innove Communications), utilities (Manila Water), insurance, electronics, and automotive, among others.

Customers who make purchases from Dragonpay-accredited merchants can pay through any BPI branch nationwide even if they do not maintain an account with the bank. They just need to fill-up a deposit slip and validate their payment online. In most cases, validation is not even necessary as Dragonpay's system can automatically detect the deposit and advise the merchant in real-time.

BPI does not charge a handling fee for deposits made to any of its branches nationwide. This makes it a preferred option for over-the-counter payment from nationwide customers.

RCBC Over-the-Counter Payments

Over-the-counter payments at all RCBC's 300-plus branches nationwide is now available. This is in additional to the support of RCBC AccessOne Internet banking.

Customers who make purchases from Dragonpay or PayEasy accredited merchants can pay at any RCBC branch even if they do not maintain an account with the bank. They just need to fill-up a deposit slip and validate their payment online. In most cases, validation is not even necessary as Dragonpay's system can automatically detect the deposit and advise the merchant in real-time. Note however that RCBC charges a handling fee in selected, small provincial branches. But in major provincial branches, there are no handling fees. Check with the teller first to make sure.

Metrobank Over-the-Counter Payment

Metropolitan Bank and Trust Company (MBTC), or Metrobank, for short, is the biggest Philippine commercial bank in terms of Capital Accounts at PHP 70.1 billion as of 2Q2009. It consistently ranks 2nd or 3rd overall in terms of Assets, Loans, Trust Accounts, and Deposits along with BDO and BPI. It has the second largest branch network in the Philippines at 727, and the 3rd largest ATM network at 1,109 (all data as of 2Q2009).

The Metrobank Group is owned by taipan George Ty. Its business interests include real estate (Federal Land), money remittance, insurance (in partnership with AXA), credit cards (in partnership with ANZ), retail (Federal Brent), and car dealerships (Toyota).

Customers who make purchases from Dragonpay or PayEasy accredited merchants can pay through any Metrobank branch nationwide even if they do not maintain an account with the bank. They just need to fill-up a deposit slip and validate their payment online. In most cases, validation is not even necessary as Dragonpay's system can automatically detect the deposit and advise the merchant in real-time. Note however that Metrobank charges a PHP50.00 handling fee in provincial branches.

Cash Handling Fee for Provincial Bank Deposits

Majority of Philippine banks practice the charging of handling fee for deposits made in territories outside the area where the account was opened. For example, if you opened a bank account in Metro Manila, and someone tries to make a cash deposit to that account from Cebu, that person trying to deposit will be levied a handling fee. The fee varies from bank-to-bank but generally falls in the range of PHP50.00 to PHP100.00.

Metrobank and its savings bank, PSBank, charges PHP50 for provincial handling fee. Strangely, check deposits do not get charged any fees even if deposited in the province. Philippine National Bank (PNB) and Landbank charges PHP100. Chinabank charges PHP50. Banco de Oro (BDO) charges PHP50. Security Bank also charges PHP50.

The more progressive banks do not charge this fee, and rightly so. Unionbank and EastWest Bank do not charge provincial handling fees. Bank of the Philippine Islands (BPI) has also decided to forego this fee recently. RCBC does not charge handling fee for its larger branches, but charges PHP100 ~ PHP110 for its smaller, remote branches.

Dragonpay accepts over-the-counter (OTC) bank deposit from banks with handling fees and those without. If the bank branch charges you a handling fee, do not deduct this from your total amount payable. Any handling fee should be borne by the customer. Dragonpay expects the exact amount due to the merchant to be deposited net of any charges.

If there is a BPI, Unionbank, EastWest Bank, or Sterling Bank of Asia branch near your area, choose those as your preferred OTC banks as they are sure not to have handling fees.  Some UCPB branches waive the fee for the first provincial deposit of the day.  Some RCBC branch also do not charge handling fee (but not all).  It is best to ask the teller first whether they charge the fee or not before making a deposit.

Unionbank Over-the-Counter Payment

Unionbank is now an over-the-counter payment option for Dragonpay users. Customers can go to any of Unionbank's 180 branches nationwide to make a payment for a purchase from a Dragonpay merchant. No Unionbank account is required from the customer. Just fill-up the deposit slip and validate the payment online, if necessary.

Dragonpay also supports Unionbank Internet banking for regular checking/savings and EON account holders for real-time online payments.

EastWest Bank Over-the-Counter Payment

EastWest Bank joins BDO as an over-the-counter payment option for Dragonpay merchants. Buyers can go to any of EastWest Bank's 114 branches nationwide (as of this posting) to deposit their payment to the bank teller. Buyers paying using this method do not need to have an EastWest Bank account. They just need to fill-up a deposit slip and validate their payment online. In most cases, validation is not even necessary as Dragonpay's system can automatically detect the deposit and advise the merchant in real-time.

Dragonpay also supports EastWest Bank's online banking facility for real-time online payments of EastWest Bank account holders.

Accepting Online Micropayments

PayPal has been making news lately with its announcement of supporting micropayments (generally transactions worth less than USD10). Accepting micropayments is the holy grail for many online services especially social, online games where the amount to be paid for things such as, virtual gifts or avatars, is normally small. Because of the fixed charges imposed by credit card companies and payment gateways, it is not feasible to sell things at PHP100 or less because of the relatively high cost of the fixed charges.

PayPal charges 5% + $0.05 per transaction. Merchants who already have PayPal accounts must open a separate business account for receiving micropayments. You cannot use the same account to accept both normal transactions and micropayment transactions. This service is currently limited to US-to-US, UK-to-UK, Australia-to-Australia, and EU-to-EU.

PayPal basically implemented their solution by extending credits to customers for small amounts. When these small amounts have accumulated to a reasonable amount, then that is the only time PayPal actually charges the buyer for the running balance. PayPal noted that in 2009, USD2 billion out of its total USD71 billion in transaction volume came from small items which would be categorized as micropayments.

Locally, Globe GCash and Smart Money are good alternative for micropayments. Their shortcoming is mainly in the convenience part. How do you load up on your mobile credits in the middle of the night when you are in that crucial stage of needing to buy an online weapon to kill the monster horde?

Bancnet and Megalink provide a good solution. However, their per-transaction fee is also quite high. Bancnet charges a fixed PHP10 per transaction, while Megalink (through The PORT) charges PHP25 per transaction. So if you are buying a PHP5 online pet food for your girlfriend's virtual pet, the gateway charges will end up costing you more than the actual item.

Dragonpay supports micropayments by charging online merchants only 5% of the collected amount. Merchants must choose between this model or the regular charging model when opening an account with us. The micropayment model has an annual maintenance fee of PHP12,000, which is really just PHP1,000 per month. There is no additional payment for the first year aside from the one-time setup fee. Only the online banking and over-the-counter banking payment methods are supported for micropayments. Over-the-counter non-traditional outlets like convenience stores are not supported.

How Does Dragonpay Validate Over-the-counter Bank Payments

Even with the prevalence of credit cards among the higher-income-bracket online consumer, over-the-counter bank deposits remain very popular with majority of local e-commerce sites. Almost all resort that I know of, for example, accepts payments for online booking by asking the consumer to deposit to their bank account by physically going to a branch, and then faxing back the deposit slip as proof of payment.

Possible reasons for this include:

1. Not a lot of people have credit cards, and bank deposit is universally available to everyone
2. Admittedly, majority of Filipinos are still wary of putting their credit card info on the Internet
3. There is less risk on the merchant side because money deposited to their account cannot be charged back

While this payment method is sufficient for low-volume transactions, imagine what would happen if hundreds, if not, thousands of customers were to pay you via bank deposits. You will then receive hundreds or thousands of faxes a day and it would be humanly impossible to match the deposit slip with the actual deposit. I do not know of any online banking facility which shows all the details including bank branch and exact time of deposit. So matching is very complicated.

From what I'm told, some banks abroad have the capability to do an HTTP call to your web server every time somebody makes a deposit to your account. This would be a really cool feature. But again, I am not aware of any local bank providing this service. Dragonpay's over-the-counter bank payment actually simulates this effect. It allows e-commerce merchants to get a pseudo or near-real-time HTTP notification when a deposit is made to Dragonpay's account in behalf of the merchant. This allows e-commerce shopping carts to complete the automated payment cycle. A step-by-step guide is provided here to understand the flow of offline payments.

Performing automated matching of bank deposits against offline or "pending" payments, is not a simple task. It involves a lot of programming and a modicum amount of guesswork. Dragonpay tries to find an exact match on the amount. But this is not guaranteed to always match because banks do not normally give change right down to the centavo. So if the online merchant requested for a payment of PHP3,128.64, the consumer will most likely pay either PHP3,128.75 or PHP3,129.00. A certain band or "margin for error" has to be considered.

For banks that do provide deposit branch information, Dragonpay will consider it in order to get a closer match. Dragonpay gets an estimate of the nearest likely time of deposit and uses this to compare against the time provided by the customer. If there is a very high likelihood of a match, given that there are no other similar-looking transactions that can possibly be considered, Dragonpay automatically assumes a match has been made and it will update its status and send the HTTP notification to the merchant.

In the cases wherein the system really cannot determine for sure if a match is present, it will fall back on human judgment to make the matching manually. If even human cannot determine the match by just looking at the records, Dragonpay support will contact the buyer to ask for proof of deposit (ie. fax/scan the deposit slip for manual verification).

Banco de Oro Over-the-Counter Bank Payment

Banco de Oro (BDO) started out as a small commercial bank decades ago. It became a powerhouse when it was acquired by taipan Henry Sy's SM Group (which also owns Chinabank). From one acquisition to the next, BDO quickly grew over a short span of time. But it was perhaps the acquisition of Equitable Banking Network that really catapulted it to the top ranks. Just prior to that, Equitable also acquired PCIBank.

As part of the SM Group, BDO enjoys premium presence at the SM malls. It is the only bank that brags 7-day-a-week banking through its mall outlets. The acquisition of the huge Equitable Card Network also gave rise to BDO Credit Cards, now one of the largest (if not the largest) card issuing and processing network. Mozcom PayEasy works with BDO Credit Cards in partnership with Asiapay to process credit card transactions online.

As of 2Q 2009, BDO is already the number 1 bank in the Philippines in terms of assets at PHP793.5 billion. Likewise, it had the largest Trust Account at PHP415 billion and it was the largest lender with Loans and Receivables at PHP455.5 billion. It was also #1 in deposits at PHP625.2 billion.

In terms of branch network, Ayala Corp.'s flagship Bank of the Philippine Islands (BPI) still leads the pack with 827 branches vs. BDO's 675. As of this writing, BDO already has over 700 branches. BPI also leads in the number of ATM's deployed with 1,573 vs. BDO's 1,299. According to BDO's latest press releases, they plan to open another 30 branches in the next 2 to 3 years. But with the impending acquisition of Export and Industry Bank (ExportBank), that will potentially add another 50 branches to BDO's network.

Customers who make purchases from Dragonpay or PayEasy accredited merchants can pay through any BDO branch even if they do not maintain an account with the bank. They just need to fill-up a deposit slip and validate their payment online. In most cases, validation is not even necessary as Dragonpay's system can automatically detect the deposit and advise the merchant in real-time.

RCBC AccessOne Internet Banking

Rizal Commercial Banking Corporation, or RCBC for short, is one of the top 10 commercial banks in the Philippines. It offers a full range of personal and corporate banking services. Its corporate website is www.rcbc.com and its Internet banking website is called AccessOne.

RCBC has a savings bank subsidiary called RCBC Savings Bank. As of this writing, RCBC Savings does not offer Internet banking. RCBC also offers a cash card system called MyWallet similar to Unionbank EON or BDO Cash Card. As of this writing, MyWallet accounts may not yet be enrolled to RCBC AccessOne. Only regular savings and checking accounts are allowed.

RCBC AccessOne runs on Microsoft IIS 6.0 and ASP.NET 2.0 technology. It is most likely running on a Microsoft Windows 2003 host operation system under the hood. The Internet banking software used, in most likelihood, came from the same vendor used by Unionbank Internet banking. The look-and-feel, process flow, as well as, the url naming conventions look too similar to be a coincidence. Since Unionbank has been offering Internet banking a longer time than RCBC, it follows that RCBC must have based their system on Unionbank's.

RCBC AccessOne provides all the basic online banking services including balance inquiry; viewing of transaction history, and funds transfer. Funds transfer can be done from regular RCBC accounts to third party RCBC or RCBC Savings accounts. The reverse is, of course, not possible because RCBC Savings account holders do not have access to AccessOne. A separate transaction password is also required for financial transactions such as funds transfer. A password expiration policy also forces you to keep changing passwords every 180 days or so.

RCBC is the flagship bank of the Yuchengco Group of Companies whose diverse business interests range from insurance, tourism, travel, education, IT, construction to automotive vehicles (Honda and Isuzu dealership), health care and advertising. It is a member of the BancNet ATM consortium. The basic RCBC savings account has a minimum maintaining balance of PHP3,000. As of this writing, RCBC has more than 300 branches nationwide.

RCBC account holders may purchase from online merchants with Dragonpay using their AccessOne Internet banking facility. RCBC users who have not enabled their AccessOne Internet banking may do so for free by registering at the RCBC AccessOne website. Activation only takes about a day or two.

Unionbank Regular CA/SA Internet Banking

For regular Checking/Savings Accounts (CASA) customers, Unionbank maintains a separate Internet banking site. I don't know why they made it separate from their EON Internet banking site since the functionality is just the same. Perhaps EON users are defined in a separate database.

One notable difference is in the login process. With EON, you type in your user id and 4-digit ATM PIN. With the regular CASA Internet banking, you type in your user id, then when you navigate to the PIN input field, it pops up an on-screen keypad. You would use the mouse to "click" in your 4-digit PIN. This is obviously a security feature to thwart keyloggers. But it can be a bit annoying and tedious, as compared to the more common type-in method.

The rest of the functions are similar to EON Internet banking. You can perform account balance inquiry; view your transaction history; pay utility bills; perform funds transfer to another Unionbank account or to an EON account; and so on. Fund transfers also need to be validated using a transaction password, which is different from your login password. From experience, the site seems to experience frequent downtime or maintenance and is often unavailable.

Unionbank is owned by the Cebu-based Aboitiz Group. It is a member of the Megalink ATM consortium and is the lead proponent for Megalink's online payment system through The PORT. The Unionbank regular CASA account requires a minimum maintaining balance of PHP10,000.

Unionbank regular CASA account holders may purchase from online merchants with Dragonpay using their Internet banking account. Users who have not enabled their Internet banking access may do so for free by enrolling their ATM card number and PIN at the Unionbank website.

Unionbank EON Internet Banking

Unionbank of the Philippines, or Unionbank for short, is listed among the top 10 biggest local banks. It is progressive, tech-savvy and has shown interest in pushing the adoption of e-commerce. It is one of the first local banks to offer essentially a prepaid Visa called Visa Electron under its EON brand. EON is an electronic-only account. It does not come with a passbook. You just register online for a Cyber Account to manage your EON account. You can use your Visa Electron card to make purchases which are debited against your account.

Unionbank EON became well known in the local e-commerce industry as being the pioneer in allowing PayPal to be funded by a Philippine bank account. It is not really a bank funding in the same way that US PayPal users can fund their PayPal account using their bank account. It is really closer to a credit card funding because, after all, the Visa Electron card is really a full-fledged Visa card. And since PayPal allows credit cards to be linked to it, it follows that it can treat the Visa tied to your EON account to be linked also.

The Unionbank EON Internet banking facility runs on Microsoft IIS 6.0 and ASP.NET 1.1 technology. Most likely, its host OS is Windows 2003 Server. Like Chinabank Online, it also has the annoying behavior of opening up a new full-screen window when you click on the EON Cyber Account link. I don't understand why banks seem to enjoy doing that since it clutters the desktop. If like me, you find this annoying, you might consider bookmarking this URL instead. It will open the EON Internet banking site on the current page or tab.

Unlike the Internet banking facility of other banks, Unionbank chose to implement its login password by synchronizing it to your EON's ATM Personal Identification Number (PIN). Since Unionbank uses a 4-digit PIN system for its ATM, that limits you to just 10,000 possible combinations. That is not really a very strong password system. But the system will lock you out after 3 consecutive erroneous attempts.

Unionbank EON Cyber Account provides all the features that you would expect from an online banking facility. You can perform account balance inquiry, view your transaction history, pay bills, perform fund transfers to 3rd party Unionbank accounts (EON or otherwise). You can even transfer funds to other bank accounts for only PHP10, one of the lowest fee I've seen in the local market.

For additional security, transactions such as fund transfers require a transaction password. This is different from your login password. Unionbank password security policy require that you change your passwords every 180 days. While this is good practice, it can be inconvenient at times for end-users as you are forced to keep coming up with new passwords until you eventually are forced to write it down somewhere so you will not forget (which is another security hazard by itself). Unlike the login password, you are no longer constrained to use a 4-digit PIN. You can use very long case-sensitive alphanumeric passwords.

Unionbank is owned by the Cebu-based Aboitiz Group whose business interest range from power generation (Visayas Electric) to logistics (2GO). It is a member of the Megalink ATM consortium and is the lead proponent for Megalink's online payment system through The PORT. The Unionbank EON account does not require a minimum maintaining balance. However, there is an annual fee of PHP350.00 to keep it active. As of this writing, Unionbank has 180 branches nationwide.

Unionbank EON account holders may purchase from online merchants with Dragonpay using their EON Internet banking account. EON users who have not enabled their Cyber Account Internet banking access may do so for free by enrolling their ATM card number and PIN at the Unionbank website. Activation only takes about a day.

Chinabank Internet Banking

China Banking Corporation (CBC) or Chinabank, for short, is one of the older local banks but is a relatively newcomer to the online world. Its corporate website is http://www.chinabank.ph and its Chinabank Online Internet banking website is https://online.chinabank.ph.

The Chinabank Online website is functional although it can be a bit slow most of the time. Its graphical interface is also a bit old. What I really find annoying about its interface is when you click on the Retail User Login link at Chinabank Online, it pops open a new, full-screen browser window instead of just using the existing one.

Without doing much guesswork, one can easily tell that Chinabank Online is running on a Sun technology platform. They did not bother to change the Sun logo that appears on the browser's title or tab bar. Looking a bit more under-the-hood shows that their web server is the Sun ONE Web Server v6.1, the web server formerly known as Netscape Enterprise Server.

The standard features one would expect from Internet banking are all here: balance inquiry; viewing of transaction history; bills payment; funds transfer to own or 3rd party accounts. Transfers to 3rd party accounts are limited to PHP50,000 a day. Aside from the standard user id and login password, Chinabank Online also requires a transaction password when performing tasks such as funds transfer. This transaction password is different from the login password for added security.

Chinabank is owned by the Sy Group of SM and Banco de Oro (BDO). It recently opened its thrift banking subsidiary, Chinabank Savings. Chinabank Savings currently does not have Internet banking facilities. Chinabank is one of the earliest members of the Bancnet ATM consortium. The minimum maintaining balance for a personal savings ATM account is only PHP1,000, one of the lowest in the local market.

Chinabank account holders can make purchases from Dragonpay merchants using their Chinabank Online account. Chinabank customers who do not have access yet to Chinabank Online Internet banking can simply go to their branch and request for one. The facility is provided by the bank at no extra charge. Activation over-the-ATM-machine only takes a day.

EastWest Bank Internet Banking

EastWest Bank's online banking facility is called EastWestBanker.com. Among the many Internet banking facilities that I've used, I have to say that its one of my favorites because:

1. It loads pretty fast.
2. The interface is clean and streamlined.
3. Its almost always available.

EastWestBanker is running on Microsoft IIS 6.0. That means it is most likely running on a Windows 2003 host operating system with the ASP.NET runtime. Most banks seem to be running on a Unix/Java platform, which I find a bit more sluggish in comparison. In the many years I've used it, I hardly recall a time when the site was down due to maintenance. In contrast, most of the other local Internet banking sites go down for regular maintenance (scheduled or otherwise). EastWestBanker has won the Philippine Webby Awards for the banking category a couple of times in the past.

The back-end database service is Sybase. Their corporate Internet banking site has been spewing out errors the past few days that reveal it is running a Sybase ADO connector. The consumer website does not seem to have the same problem though.

All the standard bank functions are available. You can inquire balances; list your transactions; pay bills; request for fund transfers to your own or other EastWest bank accounts. With other banks, you usually have to go through the hassle to register 3rd party accounts and submit signed documents before you can execute a funds transfer to that 3rd party's account. In most other countries, this is also unnecessary. Online funds transfer are limited up to PHP50,000 per day.

EastWest Bank is owned by the Gotianun-led Filinvest Group. It currently has a little over a hundred branches nationwide. The minimum maintaining balance to open a personal savings account is only PHP3,000. EastWest Bank is a member of the Bancnet ATM consortium.

EastWest Bank account holders can make purchases from Dragonpay merchants using their EastWestBanker account. EastWest Bank customers who do not have access yet to EastWestBanker online Internet banking can simply go to their branch and request for one. The facility is provided by the bank free of charge.

Dragonpay @ Twitter

Our Twitter account is now active -- http://twitter.com/Dragonpay.

High cost of credit card transactions frustrate online retailers

Online payments based on credit cards or PayPal are charged to merchants based on a percentage of gross sales plus a fixed fee portion. In the case of PayEasy and Asiapay, the fee is 4.5% + PHP 6.00. With PayPal, the percentage fee can vary from 2% to 3.75% depending on the volume. The fixed fee portion for Philippine-based merchants, however, is PHP 15.00.

Merchants often neglect the fixed fee portion and just concern themselves with the variable, percentage-based portion. But the two when taken together, can actually come out to be significant especially if the gross value of the item being purchases is small. Take for example, an item worth PHP 200. If you apply PayPal's default rate of 3.75% percentage fee; add the PHP 15.00 fixed transaction fee; add another 2% that PayPal charges for withdrawal to cover their foreign exchange exposure; you actually end up paying PHP 26.50 in fees, which is 13.25% of the total amount!

There are several types of merchants where a percentage fee is not acceptable or palatable:

1. For merchant selling luxury goods, even a 2% or a 3% fee is already considered very large because the value of the transaction is also large.
2. Merchants selling products with razor-thin margins such as consumer electronics often make only 1% or 2% and rely on volume. So if the payment system charges 3% or more, there will not be enough left to turn a profit.
3. Service providers such as schools and hospitals, where the amount billed is large, also do not find percentage-based commissions attractive.

It is common for retailers to get charged 2.5% to 3% for physical swiping of credit cards at their brick-and-mortar retail store. Online fees, however, are usually higher because of the higher risk involved in card-not-present scenarios. The usual justification of banks is the merchant also have lower cost of operations with online retailing. So this just compensates for the higher bank fees. Here's a recent news in UK where online retailers are also frustrated with high rates of credit cards.

Is Dragonpay more secure than credit cards?

Many people do not realize that it is incredibly easy to steal credit card information. They have the misconception that if they avoid using their credit cards to make online purchases, they are safe from prying eyes and fingers and will not get their account used in fraudulent transactions. This is farthest from the truth. It doesn't matter whether or not you use your credit card online. Stealing credit card information can be done easily without even resorting to any high-tech gadgetry!

While credit card security is slowly moving towards the 3D Secure standard (ie. Verified by Visa, Mastercard Securecode), these types of transactions are just a drop in the bucket as far as the total online credit card transactions are concerned. Locally, I think only HSBC, and maybe Citibank, have the capability to offer 3D secure on their cards -- and a huge majority of their cardholders are not even aware of this and therefore have not enabled the feature. Even the large card issuers like BDO and Metrobank do not offer this as far as I know.

So what is the main "security" feature of credit cards -- the Card Verification Code (CVC, or sometimes known as CVV)! This is a 3-digit (for Visa/MC) or 4-digit (for Amex) code printed at the back of the card (usually on the signature strip). Its a static code that remains for the duration of the life of your card. Its printed in plain text for anyone to see. There are no attempts to hide it or obscure it from prying eyes.

Anybody from the gasoline station attendant, to the waiter at the restaurant, or the cashier at the clothing store, can easily copy your card details (card number, expiry and CVV) while you are happily waiting in your car or table. Then when that person gets home, he can easily type in your card at an online store and make a purchase charged to your card!

Of course, when you see your bill, you will most likely file a chargeback citing you never made that purchase. The bank will most likely rule in your favor since online transactions do not have signed charge slips that can be used by the merchant as proof of purchase. So the bank will charge the online store/merchant who may have already shipped the package to the fraudulent customer. The merchant is left with no choice but to absorb the loss.

In other counties, like the US, card companies use the Address Verfication Service (AVS). Using a centralized database of cardholder info, the bank can look at the billing addressed you entered and try to match it with the one registered to your card. Its a crude method and mainly relies only on the numeric info on your billing address (ex. street number, postal code) and does not really bother to parse the alpha details. Besides, getting billing address is also quite trivial with "dumpster diving" (ie. going through someone's trash can). In any case, Philippine-based cards, or Southeast Asia for that matter, do not support AVS.

In contrast, the above scenario is not likely to happen with online bank payments. For one, Internet banking systems usually require complicated user id and password combinations with case-sensitive letters and digits of at least 8-characters long. Some banks even have a policy of expiring the password every 90 days or so. Compare that to the simplistic 3-digit CVC that stays with your card for 2 years or more depending on the expiry date of your card and displayed in plain sight!

Some Internet banking facilities require a second password to perform a transaction. This password is different from the login password. Examples of banks that require this are Chinabank, RCBC and Unionbank. Other banks require a second factor authentication mechanism thats passes through other medium like email or mobile. Standard Chartered sends a one-time PIN via SMS to the accountholder's registered mobile phone when the user tries to perform a transaction like a funds transfer. UCPB gives its users the option to have the transaction PIN sent either by SMS or by email. Banks like HSBC use a physical device that looks like a small pager. It is synchronized with the bank's time servers and generates a unique code for every use.

Regardless of what method your bank uses to authenticate and verify your online identity, it is without a doubt lightyears more advanced than the 3-digit CVC security of your credit card!

Facebook Looks To Alternative Payments for Selling Credits

Realizing that the Southeast Asian market (including the Philippines) has severely low penetration of credit cards and has higher incidence of fraud, social networking giant Facebook resorted to alternative payments to make its online currency, Facebook Credits, available in this part of the world. This validates the rationale behind the business model of Dragonpay Online Payment System.

While the MOL model described in the Facebook article from Mashable mainly resorted to prepaid cards, over-the-counter bank deposits are just as convenient. They will most likely be more affordable to the merchant also because the prepaid card distribution industry in the Philippines, in particular, demands a large piece of the pie in terms of commissions.

Dragonpay aims to pursue both over-the-counter bank payment and over-the-counter non-traditional brick-and-mortar outlets (convenience stores, pawnshops, business centers) as payment channels to give the widest and most affordable payment options to the mass market.

Benefits to Online Merchants

With credit cards being the most prevalent form of online payment, and PayPal a distant second, merchants might ask why is there a need to accept yet another online payment service. Our previous posting has highlighted the fact that the untapped market segment with no credit cards is very large -- significantly larger than the credit card market. And studies have shown that even those with credit cards would rather not use it online if there were more secure alternatives.

As of this posting, PayPal can only be funded by credit cards in the Philippines. So it follows that Philippine PayPal users are just a small subset of the (relatively) small credit card population in the Philippines. This brings us again to the point that merchants are missing a huge market who cannot pay for their goods and services simply because they have no credit cards or are afraid to use their card online for fear of fraud.

One sensitive topic that is often not understood by merchants is the issue of chargebacks. A chargeback basically happens when a credit card holder disputes a billing that is charged to him. This dispute may be legitimate or not.

Example of valid disputes are as follows:

• is if the merchant really failed to deliver the goods or service
• the item ship was damaged and the merchant refused to replace it

On the other hand, the following are examples of illegitimate chargebacks:

• there are really just people who honestly forgot about doing a transaction and files a chargeback thinking it was done fraudulently
• some cardholders may abuse the system and intentionally do chargebacks to avoid paying for the goods or services they procured

Regardless whether or not the chargeback claim is valid, the onus on proving it falls on the merchant. Not only does it takes up valuable time, it also costs money. Majority of online payment services, especially credit cards, will slap the merchant with a chargeback fee whether or not the claim is legitimate. This fee basically covers the card company's administrative work involved in processing chargeback cases. The fee can be anywhere from PHP 500 to PHP 1,500 -- sometimes more than the cost of the item being disputed.

Not only is the merchant slapped with the fee, the card company would normally immediately retrieve the amount it settled to the merchant previously. Only when proven wrong will it return the money. This behavior seems to be particularly true for Visa and Mastercard, who tend to be more pro-cardholder. They usually work on the assumption that the merchant is guilty unless proven otherwise.

After this long discussion of chargebacks, the obvious question now is -- does Dragonpay support chargebacks? The answer is 'no' because:

1. All our payment options (online banking, over-the-counter banking and over-the-counter non-traditional) do not have the concept of a chargeback
2. The password and authentication system involved with online banking is so much more advanced compared to the CVV-checking of credit cards that for one to successfully use it to make a payment, it has to be the legitimate owner of the account.

As a merchant, you have the comfort of knowing that once you get paid, you stay paid. Furthermore, this allows our merchant to sell higher risk products like intangible goods (ex. music download, online consulting services), which credit card-dependent merchants are usually not allowed to sell.

Welcome to Dragonpay!

As the Philippine e-commerce scene starts to pickup, we are beginning to see the rise of online payment solution providers. Mozcom PayEasy is one such excellent system which offers a complete suite of payments covering credit cards, PayPal, Bancnet and Megalink ATM cards, and mobile payments like Globe G-Cash and Smart Money. There are also the traditional banks which provide credit card processing online. So you might wonder -- is there really a need for yet another online payment system?

A large majority of online transactions today are done using credit cards. This severely limits the market because only about 4% of the Philippine population owns a credit card. Merchants who focus on this market are barely scraping the surface of a larger market of young people with no credit history, or even a bank account.

Here are some more interesting information based on market studies

• More than 70% of the world population does not have a credit card [PayPal]
• 75% of Internet users do not like to give out their credit card info [Pew Internet]
• More than 75% of online shoppers have access to online banking [Forrester Consulting]
• Internet retailers offering multiple payment options see a conversion rate increase of 20% [Quality Research Associates]
• 4% of international orders turn out to be fraud vs. 1.1% for domestic [Cybersource 2009]

Dragonpay was created specifically to allow this broader market to buy goods and services online through the following channels:

1. Online Banking - anybody with a local bank account can apply for Internet banking from their bank for free. Using this facility, they will be able to make online purchases from Dragonpay-affiliated merchants in real-time.
2. Over-the-Counter Banking - customers can go to any branch of a bank that we support and make an over-the-counter deposit. In a matter of minutes, our system will detect the payment and appropriately notify the online merchant that a payment has been made. We expect to have more than 3,000 bank branches in the network where customers can go to make a deposit/payment by year-end 2010.
3. Over-the-Counter, Non-traditional Payment Centers - we will be working with convenience stores, pawnshops, remittance centers, business centers and Internet cafes to allow our customers to make their payments there. We will notify the merchant in near real-time once a payment is made.

As an alternative payment provider, Dragonpay will work side-by-side with the other, more "traditional", payment providers. We do not plan to supplement them but to complement them. After all, at the end of the day, the common goal is to develop the local e-commerce industry.