eTap, the country’s sole manufacturer of turn-key self-service payment machines that service the unbanked, has spent much of 2023 expanding the company’s operations. Both eTap Inc. and its wholly-owned subsidiary eTap Solutions now handle close to P12 billion in transactions each month, with over 1,900 machines and over 30 satellite offices nationwide.
Founded in 2015 by Percy Hernandez and Marlon Portugal, eTap focuses on extending financial services to the country’s unbanked. eTap Inc. focuses on the fintech side of the business, manufacturing self-service payment machines enabling users to access financial services such as topping up e-wallets, paying bills, sending money, and more. eTap Solutions, on the other hand, owns and operates its own brand of payment kiosks.
Though Hernandez and Portugal still play a leading role at eTap, they have gradually passed responsibilities to their sons. Brothers Miguel and Carlo Hernandez act as Investment Officer and President respectively, while Reinier Portugal is the Vice President of Finance and Operations. Together they’ve led eTap’s steady expansion throughout the Philippines, particularly in Visayas and Mindanao.
A family affair
According to a McKinsey report, about 44% of the country’s bankable population—meaning those aged 15 or older—are still without a bank account. Much of the unbanked population also lives in rural areas, with there being an estimated 475 unbanked cities and municipalities in the country, mostly in provincial areas.
eTap’s decision to focus on provinces was significant for its recent growth, with Hernandez sharing that eTap already has a significant market share in Visayas and Mindanao thanks to their early entry in these regions. “We realized that a lot of our competition was already spread throughout Metro Manila,” explained Miguel Hernandez. “Yet these solutions were really needed in the provinces, where we eventually decided to focus.”
The eTap team’s passion for bridging the gap in financial services is attributed largely to Percy Hernandez and Marlon Portugal’s desire to create a long-lasting solution people could use. The original founders initially embarked on developing banking apps—only to discover that the demand in the Philippine market was too low at the time.
eTap then pivoted selling their machines to other payment aggregators, white labeling them but still filing a utility patent to protect their systems. As the company bootstrapped, it slowly began to focus on offering bills payment services while officially registering as an Operator of Payment System (OPS) with the Bangko Sentral ng Pilipinas.
It was during this pivot that Percy Hernandez and Marlon Portugal realized the advantages of developing their proprietary software in-house on top of distributing eTap’s own hardware.
This sets the company apart from the bulk of their competition that sticks to manufacturing hardware while depending entirely on third-party software, which potentially leaves them vulnerable to errors and cybersecurity issues.
Controlling both hardware and software allows eTap to control the quality of its services—a principle instilled in their sons by Percy Hernandez and Marlon Portugal from an early age. “Our fathers always taught us that even just P1 could be the difference between someone eating or not eating that day,” Hernandez revealed. “That’s why everything we do is with the aim of being a trusted financial service provider to the masses.”
Finding its strengths
eTap’s control over both hardware and software also enables it to keep pace with market trends. “The software makes each eTap machine a smart ATM. It can be updated to include emerging digital banks, wallets, and payment services through software updates,” Hernandez said. “The machines we can also sell to clients, upping our chances of getting repeat business.”
As eTap’s operations grow, Hernandez explains that it is both a tech and cash management company at its core, to the point that it also offers cash management services to their competitors. With eTap handling an estimated upwards of P150 million in cash each day, the company plays a role in keeping the digital economy stable: everything from paying bills online to finalizing e-commerce transactions depends on how well they provide their services.
Hernandez also points out eTap’s dedication to customer service as a key differentiator, citing eTap’s Facebook page which shows an average 5.0 rating from over 3,000+ reviews. Hernandez chalks this up to eTap’s propensity for rapid responses, with every eTap machine displaying multiple ways to get in touch with customer service (hotlines, social media, etc.) in case of a problem.
Customers are also guaranteed to talk to an actual human each time. “We have about 30 people in customer service,” Hernandez shared. “We’re aware that more businesses use AI chatbots but we believe some things cannot be left to bots. It’s people’s hard-earned money we’re talking about. Even eTap’s collectors and technicians undergo customer service training, in case they run into someone with a problem on the ground.”
The future of financial inclusion
From the beginning of 2022 to October 2023, eTap Inc. saw an increase in orders, with machine sales rising from 1,215 to 1,809, and 1,600 of them already delivered. Similarly, eTap Solutions expanded its presence, going from 19 satellite offices and 131 store partners to 28 satellite offices and 270 store partners across the Philippines. eTap Inc. also counts the likes of Globe and ECPay among major clients while eTap Solutions has partnered with a slew of retailers including Alfamart, FamilyMart, DALI, TGP, Julie’s Bakeshop, and more.
Portugal points out that eTap’s being ubiquitous allows it to consider other verticals. “Because people send their payments through us, what we have is data—data on what people are spending on, how often, when they do it, etc.”
Although the eTap team doesn’t exclude the possibility of using its data and other capabilities to potentially expand into services like savings and loans, the focus today remains on being a leader in self-service payment machines and managed services. Overall, eTap prioritizes providing a great product and service—a principle the Hernandez brothers and Portugal readily attribute to their fathers.
“Our priority for now is driving organic growth,” said Hernandez. “We’re not looking for a quick exit here. As our fathers taught us, we want to create great products and execution that will stick around for the long-term.”