Global venture studio Talino Venture Studios and sustainable development consulting firm Chemonics have teamed up to seed-fund and launch Higala, a startup that offers an inclusive instant payment system (IIPS) in the Philippines.
Financial details of the investment were not disclosed but Talino Venture Studios and Chemonics said Higala has already secured the backing of the Bangko Sentral ng Pilipinas (BSP), the country’s central bank.
The startup is still at its earliest stage but it already claims to have garnered the support of several partners, including the Rizal Commercial Banking Corporation, Xendit, FintechAlliance.PH, and the Rural Bankers Association of the Philippines.
Higala, which means “friend” in the Cebuano dialect, seeks to serve as a “financial superhighway” that will connect thrift banks, rural banks, and microfinance institutions that are currently not included in the payment networks.
The Philippines already has at least 400 rural banks but only about 18 of them are connected through InstaPay. This means that the lack of interoperability among these banks continues to be a major challenge.
Among the factors that contribute to the exclusion of these banks from payment networks is the high cost involved in switching and onboarding, according to the announcement.
“Higala will help modernize our country’s digital financial infrastructures and enable the participation of financial institutions through our network,” Higala President and CEO Vice Catudio said.
The goal, he added, is to make banking more inclusive, especially to the underserved segments of the population that have limited access to traditional banking services.
Per the announcement, the startup will lower the cost of real-time payments to allow financial institutions to reasonably price their instant payment services.
It also aims to provide inclusive financial solutions to the underbanked as well as rapidly enable merchants to accept digital payments.
“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,” Catudio added.
Central bank data shows that 138 banks engaged in microfinance served around 1.9 million borrowers as of the third quarter of 2023.
Non-banked microfinance institutions, such as cooperatives, supported 9.7 million members by the end of 2021. Meanwhile, microfinance non-government organizations catered to 6.6 million clients as of 2022.
The BSP targets to have 70 percent of adult Filipinos with bank accounts this year.