Local venture builder Talino Venture Studios and Chemonics International, a US-based development consulting company, have invested $1.5 million to develop Higala, the country’s pioneer startup Inclusive Instant Payment System (IIPS).

At a launch ceremony on Thursday night, Higala president and CEO Vice Catudio said the venture will serve as a financial superhighway that will connect thrift banks, rural banks, and microfinance institutions currently excluded from payment networks due to high switching and on-ramp costs.

“Higala will help modernize our country’s digital financial infrastructures and enable the participation of financial institutions through our network. Our goal is to make banking more inclusive, especially to the underserved segments of the population that have limited access to traditional banking services,” Catudio said.

Open platform

“Through Higala’s open payment platform and suite of solutions, we will enable new market players to aggressively develop and market innovative payment services to both consumers and merchants,” he added.

The presence of 400 rural banks in the Philippines reveals a surprising statistic: only 18 of these banks are part of InstaPay, a platform that facilitates seamless interbank transactions.

The lack of interoperability among rural banks highlights a missed opportunity for greater financial inclusion in the country.

The underutilization of modern banking technologies deprives a significant portion of the Filipino population of the benefits they can offer, perpetuating the gap in financial access.

As such, Higala will promote inclusion by lowering the cost of real-time payments, which helps financial institutions to reasonably price their instant payments. It will also provide inclusive financial solutions to the underbanked as well as rapidly enable merchants to accept digital payments.

“With Talino and Chemonics providing funding for Higala, we bring together the impact of venture investing and global good to expand the benefits of financial inclusion to segments that need them most,” Talino CEO Winston Damarillo said.

Higala leverages the open payment platform of Mojaloop Foundation, a nonprofit dedicated to boosting financial inclusion through its open-source software called Mojaloop.

With Mojaloop’s open payment framework, Higala facilitates seamless connectivity among various financial entities, including banks, institutions, payment gateways, merchants, and the central bank. This approach enhances affordability and accessibility in financial transactions.

Bangko Sentral ng Pilipinas Deputy Governor Mamerto Tangonan said the central bank supports Higala’s goal of enhancing the efficiency of the national payment system and modernizing the country’s digital payments infrastructure.

“Adopting modern technologies such as artificial intelligence, machine learning, and compliance with global standards like ISO 20022 can help payment service providers offer new services, improve customer experience, and make digital transactions more safe and secure,” Tangonan said.

Aside from BSP, Higala’s partners and collaborators include the Rizal Commercial Banking Corporation, Xendit, and FinTech Alliance. Ph.D., and the Rural Bankers Association of the Philippines.