Higala, the Inclusive Instant Payment System (IIPS), aims to capture the underserved market of rural banks, thrift banks, and microfinance institutions, which remain untapped by the electronic fund transfer systems like InstaPay.
Spearheaded by Talino Venture Studios, a venture studio for sustainable innovation, together with Chemonics International, a leading sustainable development firm, Higala aims for a more inclusive financial ecosystem by offering significantly lower transaction fees compared to others.
“Higala will help modernize our country’s digital financial infrastructures and enable the participation of financial institutions through our network,” said Vice Catudio, CEO and president of Higala.
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The standard rate for bank-to-bank transfer fees stands at P15-P25. Higala is looking to offer fees under P1.
Open-source infrastructure
For Higala to make it possible, it is leveraging the open payment platform of Mojaloop Foundation, a nonprofit dedicated to boosting financial inclusion through its open-source software called Mojaloop.
Winston Damarillo, venture capitalist and strategist, and managing partner at Talino Ventures, emphasized that with an open-source framework, Higala will be able to lower the cost to build, maintain, and modify the inclusive instant payment system.
“It’s about time we look at open source as something reliable,” Damarillo said. “We want to ensure that everyone is fully banked by lowering the bar of obtaining bank accounts, lowering the friction cost for digital payments, encouraging merchants to accept them, and empowering all financial institutions to provide it to their constituents, especially rural banks.”
Interoperability
Citing publicly available data, Higala noted that of the 400 rural banks in the Philippines, only 18 offer fund transfers via InstaPay.
The launch of Higala highlighted the lack of interoperability within rural banks. This pain point is what sparked the idea for the seed-funded Higala.
As an IIPS, Higala will serve as a “financial superhighway” that will connect thrift banks, rural banks, and microfinance institutions that are currently excluded from payment networks because of high switching and on-ramp costs.
Higala is also looking to enable new market players to tap into other innovative payment solutions servicing consumers and businesses.
“This includes integrating solutions such as regulatory technologies like e-KYC and AML-TF monitoring, AI-based risk detection and management, banking microledgers, payment hub that will enable instant fund transfer across participating banks, and a global transaction gateway for remittance,” said Catudio.
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