If you are in the United States and using PayPal, chances are you are drawing funds from your credit or debit card. If it draws money from your bank account, that’s ACH at work under the hood. For starters, ACH (Automated Clearing House) as defined by answers.com is a system of the U.S. Federal Reserve Bank that provides electronic funds transfer (EFT) between banks. Your can send and receive money from ACH-accredited US financial institutions just by giving your bank’s account and routing number. So if you are paying using PayPal electronic check or sending remittances from your bank account, ACH is a blessing many of whom may not even be aware of.

However in the Philippines, there is no such ACH in our banking system. If you are one of those who routinely transfer funds to bank accounts in the Philippines and has no time to go to the bank nearest you, EFT (electronic funds transfer) from your bank’s online facility may be the closest equivalent of ACH in our country. And that’s assuming EFT from branch to branch of the same bank (e.g. BDO to BDO EFT).

But what if the recipient bank is different from yours? And worse, what if the recipient bank is on a different bank network (BancNet, MegaLink and ExpressNet)? As of now, inter-network funds transfer is not available. You need to get an exercise and go to the bank directly!

So there’s a lot of hodge-podge solutions for EFTs that are proprietary to the three major bank networks. However, tying up SMART Money or GCash to one of these networks may lend a partial semblance to ACH in the US.

Here are the possible scenarios:

1) For MegaLink

    * Intra-bank Funds Transfer -through 1) ATMs, 2) online or 3) mobile (under the umbrella of MegaLink Mobile Banking provided by SMART)
    * Inter-bank Funds Transfer – through ATM only (more info here).

2) For BancNet

    * Intra-bank Funds Transfer -through 1) ATMs, 2) online or 3) mobile (under the umbrella of BancNet Globe Mobile Banking provided by Globe)
    * Inter-bank Funds Transfer – through 1) online (needs Java Runtime Environment, IE 5.5 or Netscape 6.2) or 2) mobile (same above)

3) For ExpressNet

    * Intra-bank Funds Transfer -through 1) ATMs, 2) online or 3) mobile (under BPI Express Mobile provided by Globe)
    * Inter-bank Funds Transfer – ask bank representative to be sure

The Java front-end requirement may have been imposed due to Java’s cross-platform compatibility at the bank’s backend software system. Anyway, if you will notice, Globe corners part of the BancNet network market because as of this writing, not all banks of the said network are offering the BancNet Globe Mobile Banking yet. And likewise with the ExpressNet. But once BancNet and ExpressNet rolled out their respective mobile banking service to all its member banks, we can say that Globe will capture two-thirds of the mobile banking market.

The remaining one third will be captured by SMART with its MegaLink Mobile Banking.

In addition, Globe is gaining more ground than SMART in the rural bank sector. Globe since introducing GCash in 2004 has been in partnership with Chemonics International and integrated GCash that would enable rural bank members to apply for loans, pay loans, make deposits and withdrawals all through texting.

Speaking of electronic payment systems for local online merchants, Mozcom’s PayEasy system may be your best bet although its one-time membership fee of P11,200 is a bit pricey plus P5,000 per month or 6% of gross transactions, whichever is higher.

For individuals,you can have PayEasy’s PayPal support. Direct PayPal support in the Philippines is limited to sending payments only (no receiving of local or overseas payments). This might be due to lack of ACH system in the country.

Or you can have GCash or SMART Money as your other alternative but this limits your market to the Philippines only. Until then, all we can hope is for those three major networks to inter-operate their mobile banking services so that you can send GCash to SMART Money and vice-versa.

While internet penetration is gaining traction here in the Philippines (though it’s not mainstream yet), we’re better off if BSP will spearhead an ACH system and implement it in the local bank industry. Maybe then can we see PayPal set up local accounts that can be used by enterprising Pinoys worldwide.