November 9, 2004 (STAR) By Margaret Jao-Grey - By four in the morning, a line forms at the head office of the Government Service Insurance System. The line at SM-Manila starts a little bit later in time for the mall’s 10 o’clock opening.

In eight other locations nationwide, some of them in SM malls, the lines are made up of government employees, both current and retired, who need to have their pictures taken and stamped before being issued their e-cards.

"We chose to have some centers located in malls, which are more accessible and stay open after GSIS offices close at five. While waiting for their cards to be processed, our members can also do some errands in the mall," said president and general manager Winston Garcia.

The GSIS e-card is an electronic wallet or a debit card. Unlike a credit card, where the cardholder takes a short-term loan from the card issuer, a debit card uses the cardholder’s own money to make purchases.

"With the e-card, our 1.25 million-members will be able to get their money in real time. A member can apply for a loan online and have it approved within a minute. Whether it is a member’s monthly pension or a loan applied for and granted, we will send a P1 text message to the member that the money has already been credited to his/her account and that he/she can withdraw the money in any ATM in the country," said Garcia.

Still Testing The System

Right now, the e-card only extends cash advances worth P5,000 per member, payable in three years. The application for the cash advance can only be done online.

"The application is approved within a minute but the release is deliberately delayed by two to three hours. We want to make sure we have flushed out all the kinks in the system when we start granting salary loans online beginning next year," said Garcia. "From there, we will be expanding the coverage of the e-card to other loans.

The e-card is a partnership between GSIS and Union Bank of the Philippines, which wasn’t the pension fund’s first choice.

As early as January, 2003, GSIS sent out feelers to three government depositary banks–Development Bank of the Philippines, Land Bank of the Philippines, and the Philippine National Bank.

"Our major requirement was that the e-card should be able to transact in real time, anytime, anywhere in the country. LandBank and DBP said they didn’t have the facilities to do that. PNB offered a purely ATM project," said Garcia.

GSIS expanded the invitation to private domestic commercial banks. Aside from LandBank and PNB, which again bid for the project, DBP formed a partnership with Equitable-PCI Bank. Bank of the Philippines and Union Bank of the Philippines also submitted proposals.

The choice was narrowed down to two, largely because of their security feature. BPI was linked to the security system of Mastercard while UBP had Visa. GSIS opted for UnionBank, which asked for a P1 billion maintaining balance, half of what BPI asked.

Under the five-year agreement, GSIS will provide the venue or office space for card processing while UnionBank will take care of the equipment.

"We initially thought a 300-square meter card center would be adequate but we have to rethink that, given the long lines of members to be processed. At the same time, it doesn’t make sense to increase the four cameras and four stamping machines per center to speed up processing. Aside from the additional and unnecessary cost involved, we expect to release 1 million e-cards within a year after its launch last Oct. 18," said Garcia.

As volume decreases, the cameras and stamping machines will be moved to other areas in the country. After that, the equipment will be maintained so e-cards can be issued to new government employees and to replace lost e-cards.


GSIS will absorb the cost of the P25-card issued to each member. In exchange, it will immediately save P25 million in checks for pensions and loans, which it will no longer have to issue to members.

"It’s win-win scenario for everybody. UnionBank will make money from its float. We will be able to speed up the services we extend to our members. Members will be able to transact business with us even after working hours. There will be no human intervention to slow down the process," said Garcia.

Best of all, the e-card project has not resulted in the laying off of GSIS personnel, who have merely been shifted from the processing side to accounts management and updating the pension fund’s database, which has shot up from zero three years ago to the current 85% level.

"I’d been happy if 95% of our database is updated. Cleaning and updating our database is crucial to the success of the e-card. We will know how much each member has borrowed from us and how much more he/she can borrow," said Garcia. "For the past eight months, when we applied cross default on loans in arrears, we collected P3.5 billion. This does not even include underpayments or non-remittance of membership dues."

In its move to provide better services for its members, the pension fund is not surprised that it has generated savings that it intends to plow back to its members.

Reported by: Sol Jose Vanzi

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