Visa Philippines eyes 2 more SME products

VISA PHILIPPINES seeks to launch two more financing solutions for small businesses as the company tries to bridge the funding gap for small and medium enterprises (SMEs) in the country.

“By introducing players who are interested in this space in making the model work, then it also can provide incentives for others to follow,” Visa Country Manager Jeffrey V. Navarro told a news briefing on Tuesday. “That’s what we’re trying to do.”

The global SME funding gap stands at $5.2 trillion, 46% or $2.4 trillion of which is in East Asia and the Pacific, Visa Head of Commercial Money Movement for Southeast Asia Gareth Jon Parrington said, citing World Bank data.

The funding gap in the Philippines is about $210 billion or about 10% of $2.4 trillion, he told the same briefing. “So it’s actually one of the largest funding gaps you see by portion across Asia Pacific. I think it’s the second largest, so it is disproportionate.”

Mr. Navarro said the local SME demand for capital and funding is P221 billion but only P15 billion is available to them.

He said the Visa solutions would be launched through partnerships with local traditional banks, though discussions are ongoing.

“Those discussions with clients are still on the solution side on what really is the best way to be able to reach SMEs and the form factor that really resonates with them,” he said.

“If the agreement is that we can go on a virtual side, then it works like ordinary parts, but I suspect that by default, normally there’s a preference towards a card, especially for SMEs,” he added.

“Our partners can choose to have both,” Mr. Parrington said.

Mr. Navarro said Visa would eventually address the funding gap for microenterprises, but the company would focus first on SMEs this year.

“We’re trying to hit it one segment at a time,” he said. “Right now, with the soon-to-be four partners towards the end of the year, generally the focus will be on the SME side. Then we go again and expand.”

The two Visa solutions will add to Visa’s partnership with CIMB Bank PH in February, which will launch a business debit card in the third quarter to complement an “upcoming business deposit product.”

Visa has also partnered with Equicom Savings Bank for various card products, including the Equicom key card and cash card, which are accepted in more than 29 million establishments worldwide.

Mr. Parrington said Visa sees opportunities in providing solutions to SMEs, particularly loan products. 

He noted that SMEs often face barriers when applying for financing, such as strict documentary requirements and collateral. Visa offers consulting services and facilitates the release of such financing to SMEs securely, he added.

“That’s where these credentials come in, particularly with virtual cards,” he said. “Finally, we’re working with governments across Southeast Asia when it comes to providing better views of loan utilization and where loans are spent.” — A.M.C. Sy