DISCLAIMER. This report is made possible by the support of the American people through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Panagora Group and do not necessarily reflect the views of the United States Agency for International Development or of the United States government. E-PESO EX-POST PERFORMANCE EVALUATION FINAL REPORT USAID/Philippines Collaborating, Learning and Adapting for Improved Development USAID/COLOMBIA i | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV Contract Number: 72049220D00004 Submitted: March 8, 2022 Contractor: Panagora Group COR: Albert Aquino Authors: Maria Lourdes Lopez (Team Leader) and Joel Paulin Mendoza i | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV ABSTRACT E-PESO was a U.S. Agency for International Development (USAID)-supported project that aimed to support the Philippines’ shift from a cash-intensive to a cash-lite economy. The activity was implemented within a six-year period from March 18, 2015 to February 17, 2021. Our ex-post evaluation informs interested parties of the gains and the sustainability of those gains resulting from the E-PESO Activity. Our evaluation also identifies the factors that contributed to the results achieved and documents lessons from activity implementation. Our evaluation provides information about the effects of the coronavirus disease 2019 (COVID-19) outbreak and issues relating to digital financial inclusion. The primary audience for our evaluation is USAID/Philippines, the Government of the Philippines and their stakeholders interested in the development of a e-payments systems. Secondary audiences include USAID worldwide and those interested in e-payments and ex-post performance evaluations. The evaluation questions focus on three evaluation criteria: relevance, effectiveness, and sustainability. In particular, the evaluation answers the following questions: 1. In what ways does E-PESO support the country’s development goals and USAID’s country cooperation strategy objectives? 2. Did E-PESO achieve the four sub-purposes on the development of a lasting and inclusive economic infrastructure? What are the possible reasons for the successes and failures? 3. What evidence supports the likelihood that the benefits of the E-PESO Activity will extend past the activity’s period of performance, and what considerations should future, similar activities consider? The evaluation team used a mixed-methods approach, combining qualitative and quantitative data analysis to answer the evaluation questions. It included review of project documents and other, related secondary sources and key informant interviews (KIIs). The evaluation concluded that E-PESO remained highly relevant given the strong alignment with country priorities at the national and local levels. The implementation of E-PESO was timely considering the COVID-19 outbreak. With support from E-PESO, Bangko Sentral ng Pilipinas (BSP) laid the groundwork to create an interoperable payment system that was crucial in helping the financial system run during the pandemic. E-PESO has been effective, as the data show. The volume of monthly digital payments reached 20.1 percent in 2020, suggesting that the country is on track to meet the current target of 50 percent by 2023. Adoption was hastened by the COVID-19 pandemic, although increasing adoption was already observed before lockdowns. Factors contributing to the success of the project include the government counterpart’s commitment to implementing reforms, the presence of institutional champions, partnership with the private sector, effective multi-stakeholder engagement, and adaptive project management. Finally, gains E-PESO brought about are highly likely to be sustained, as evidenced by strong country ownership (i.e., the digitalization agenda is backed by policies, institutional road maps, strong leadership, and BSP’s institutional capacity). Beyond project completion, results of initiatives related to E-PESO USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | ii adoption with major government counterparts are mixed, but the digitalization agenda within the government deepened. The agenda now covers development of payment streams, new initiatives with other government agencies, and active information campaigns. 3 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV CONTENTS ACRONYMS IV EXECUTIVE SUMMARY 1 EVALUATION PURPOSE AND EVALUATION QUESTIONS 3 BACKGROUND 4 EVALUATION METHODS AND LIMITATIONS 7 FINDINGS 9 CONCLUSIONS 32 LESSONS 35 ANNEXES 38 USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | iv ACRONYMS 4Ps Pantawid Pamilyang Pilipino Program ACH Automated Clearing House AFCS Automated Fare Collection System AOR Agreement Officer’s Representative ARTA Anti-Red Tape Authority BIR Bureau of Internal Revenue BSFI BSP-Supervised Financial Institution BSP Bangko Sentral ng Pilipinas BTMS Budget and Treasury Management System CAN Cash Agent Network CDCS Country Development Cooperation Strategy CDI Cities Development Initiative CGAP Consultative Group to Assist the Poor COVID-19 Coronavirus Disease 2019 CSO Clearing Switch Operator CWEDE Connecting Women to the Digital Economy DBM Department of Budget and Management DICT Department of Information and Communications Technology DILG Department of Labor and Local Government DO Development Objective DOTr Department of Transportation DSWD Department of Social Welfare and Development DTI Department of Trade and Industry eBOSS Electronic Business One-Stop Shop ECQ Enhanced Community Quarantine 5 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV EIS E-Invoicing System EMI Electronic Money Issuer eTSPCert Electronic Tax Software Provider Certification GPH Government of the Philippines GRC Governance, Risk Management, and Compliance System ICT Information and Communication Technology IDMTP Integrated Digital Marketing Training Program JMC Joint Memorandum Circular KII Key Informant Interview LGU Local Government Unit MSME Micro, Small, and Medium Enterprises NATCCO National Confederation of Cooperatives NIST National Institute of Standards and Technology NPS National Payment System NPSA National Payment Systems Act NRPS National Retail Payment System PCMS Payments and Currency Management Sector PDP Philippine Development Plan PEPPOL Pan European Public Procurement Online PFM Public Financial Management PPMI Philippine Payments Management, Inc. PRM Program Resource Management PSMB Payment System Management Body RA Republic Act REBUILD PH Revitalizing Businesses, Investments, Livelihoods, and Domestic Demand USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | vi SAP Social Amelioration Program SCAN Shared Cash Agent Network SDG Sustainable Development Goal SEA Southeast Asia SIMM Scaling Innovations in Mobile Money SOW Statement of Work UN United Nations USAID U.S. Agency for International Development 1 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV EXECUTIVE SUMMARY The E-PESO Activity was a U.S. Agency for International Development (USAID)-supported project that aimed to support the Philippines’ shift from a cash-intensive to a cash-lite economy. The activity was implemented within a six-year period from March 18, 2015 to February 17, 2021, and involved close collaboration with government agencies and the private sector. This evaluation informs interested parties of the gains and the sustainability of those gains resulting from the E-PESO Activity. This evaluation also identifies the factors that contributed to the results achieved and documents lessons from activity implementation. This evaluation provides information about the effects of the coronavirus disease 2019 (COVID-19) outbreak and issues relating to digital financial inclusion. The primary audience for this evaluation is USAID/Philippines and the Government of the Philippines and their stakeholders interested in the development of a e-payments systems. Secondary audiences include USAID worldwide and those interested in e-payments and ex-post performance evaluations. The evaluation questions focus on three evaluation criteria: relevance, effectiveness, and sustainability. In particular, the evaluation answers the following questions: 1. In what ways does E-PESO support the country’s development goals and USAID’s country cooperation strategy objectives? 2. Did E-PESO achieve the four sub-purposes on the development of a lasting and inclusive economic infrastructure? What are the possible reasons for the successes and failures? 3. What evidence supports the likelihood that the benefits of the E-PESO Activity will extend past the activity’s period of performance, and what considerations should future, similar activities consider? The evaluation used a mixed-methods approach, combining qualitative and quantitative data analysis to answer the evaluation questions. It included review of project documents and other, related secondary sources and key informant interviews (KIIs). The evaluation concluded that E-PESO remained highly relevant given the strong alignment with country priorities at the national and local levels. The implementation of E-PESO was timely considering the COVID-19 outbreak. With support from E-PESO, Bangko Sentral ng Pilipinas (BSP) laid the groundwork to create an interoperable payment system that was crucial in helping the financial system run during the pandemic. E-PESO has been effective, as the data show. The volume of monthly digital payments reached 20.1 percent in 2020, suggesting that the country is on track to meet the current target of 50 percent by 2023. Adoption was hastened by the COVID-19 pandemic, although increasing adoption was already observed before lockdowns. Factors contributing to the success of the project include the government counterpart’s commitment to implementing reforms, the presence of institutional champions, partnership with the private sector, effective multi-stakeholder engagement, and adaptive project management. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 2 Finally, gains E-PESO brought about are highly likely to be sustained, as evidenced by strong country ownership (i.e., the digitalization agenda is backed by policies, institutional road maps, strong leadership, and BSP’s institutional capacity). Beyond project completion, results of initiatives related to E-PESO adoption with major government agencies are mixed, but the digitalization agenda within the government deepened. The agenda now covers development of payment streams, new initiatives with other government agencies, and active information campaigns. Regarding recommendations, the evaluation team completed this study after E-PESO had closed and on a relatively short timeline. Because E-PESO leadership and staff had moved on to other pursuits and were not able to request that their partners and stakeholders meet with the evaluation team, and many stakeholders were unable or unwilling to dedicate the time for remote key informant interviews or focus group discussions, the evaluation team was not able to triangulate all of the findings. Instead, the evaluation team relied on project documents, government and industry statistics, and outside research on the digital economy. While the evaluation team is confident in its findings and conclusions based on the available evidence, the team determined that the evidence is not strong enough to make recommendations. Instead, the evaluation report gleans lessons learned from E-PESO’s implementation that may inform future project design and implementation. 3 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV EVALUATION PURPOSE AND EVALUATION QUESTIONS EVALUATION PURPOSE After completing the E-PESO activity in February 2021, USAID/Philippines commissioned this evaluation to gain information about E-PESO’s results and their sustainability. Conducted from October 1, 2021, to January 30, 2022, this quick evaluation identified the factors that contributed to E PESO’s results and documented the lessons arising from implementation. The lessons learned in this evaluation will be useful in the implementation phase of other, related development interventions in the future1. As the last year of E-PESO’s implementation was characterized by government-imposed lockdowns and community quarantines caused by the coronavirus disease 2019 (COVID-19) outbreak, the evaluation touched on the effects of the pandemic on E-PESO’s implementation as well as on the shift to digital payment. The evaluation also explored issues related to digital financial inclusion. The primary audience for this evaluation is USAID/Philippines and the Government of the Philippines and their stakeholders interested in the development of a e-payments systems. Secondary audiences include USAID worldwide and those interested in e-payments and ex-post performance evaluations. EVALUATION QUESTIONS This evaluation focuses on the following three evaluation criteria: (1) relevance, (2) effectiveness, and (3) sustainability. The main evaluation questions were based on the Task Order. Further, specific queries and sub-questions were developed to answer particular aspects of the evaluation criteria2. These evaluation questions guided the structure of the evaluation tools and the processing and analysis of data. Annex B presents the evaluation design matrix, including the detailed evaluation questions. Following are the main evaluation questions: 1. RELEVANCE: In what ways does E-PESO support the country’s national development goals and USAID’s country cooperation strategy objectives? 2. EFFECTIVENESS: Did E-PESO achieve the four sub-purposes of developing a lasting and inclusive economic infrastructure? What are the possible reasons for the successes and failures? 3. SUSTAINABILITY: What evidence supports the likelihood that the benefits of E-PESO will extend past the activity’s period of performance? What considerations should future, similar activities take into account? (See Annex A – Statement of Work) 1 Discussed during the May 20, 2021, consultation meeting as part of the preparation of the Scope of Work (SOW) on the evaluation of E PESO. The meeting was attended by the Agreement Officer’s Representative (AOR) of E-PESO and Program Resource Management (PRM). 2 Discussed during the May 20, 2021, consultation meeting as part of the preparation of the Scope of Work (SOW) on the evaluation of E PESO. The meeting was attended by the Agreement Officer’s Representative (AOR) of E-PESO and Program Resource Management (PRM). USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 4 BACKGROUND TABLE 1. ACTIVITY INFORMATION Activity Name E-PESO Implementing Partner Chemonics International Cooperative Agreement number AID-492-C-15-0001 Total Estimated Cost $20.9 million Total Obligation: $12.8 million Dates of Implementation: March 18, 2015 – February 17, 2021 Active Geographic Regions Philippines Mission Development Objective (DO) CDCS 2013- 2019 DO 1: Broad-based and Inclusive Growth Accelerated and Sustained Mission Development Objective (DO) CDCS 2020-2024 DO 2: Inclusive, Market-Driven Growth Expanded In 2015, a study by the Better Than Cash Alliance estimated that 99 percent of payment transactions in the Philippines were conducted in cash3. The shift to electronic payments has vast potential that has been shown to provide a range of benefits towards promoting economic growth including: driving financial inclusion and economic empowerment, particularly among women and youth; improving social protection and humanitarian response systems; enabling more efficient and productive health, agriculture, and energy sectors; improving governance, including increased transparency and reduced corruption; and increasing economic growth and market-level development4. The E-PESO Activity aimed to support the Philippines’ shift from a cash-intensive to a cash-lite economy by developing an efficient, transparent, and inclusive e-payment ecosystem. This shift to electronic payments is expected to contribute to broad-based economic growth, supporting the United States– Philippines Partnership for Growth objectives. The E-PESO Activity also aligned with government priorities. The Philippine Development Plan (PDP) 2011–2016 dedicated one chapter to a resilient and inclusive financial system. Figure 1 presents the E-PESO results framework. It explains the cause-and-effect relationships among inputs, sub-purposes, and the overall goal. The underlying development hypothesis was: “By promoting the rapid, widespread shift from cash to e-payments usage, E PESO will support the Philippines to reach 3 Better Than Cash Alliance, Country Diagnostic: The State of Digital Payments in the Philippines, December 2019, https://btca-production￾site.s3.amazonaws.com/documents/436/english_attachments/The_State_of_Digital_Payments_in_the_Philippines.p df?1577119102. 4 Jamie M. Zimmerman, Mission Critical: Enabling Digital Payments for Development . A USAID Opportunity Brief, https://www.usaid.gov/sites/default/files/documents/15396/USAID-DFS-OpportunityBrief.pdf. 5 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV a tipping point of e-payment adoption that will represent a critical mass to become a self-sustaining e￾payment ecosystem.” Figure 1. E-PESO Results Framework Source: E-PESO Final Report E-PESO’s overall goal aimed to have an efficient, transparent, and inclusive retail e-payment system contributing to broad-based growth. This goal was measured by the number and share of e-payment users and the number of financial products, services, or applications designed or enhanced to meet the needs of low-income clients. E-PESO’s purpose was for the scale of e-payment usage to reach a tipping point, measured by the share of e-payments accounting for retail payment transactions and the number of active e-payment users. Overall Goal: Efficient, Transparent, and Inclusive Retail E-Payment System Contributes to Broad￾Based Growth Sub-Purpose 1: Rapid Adoption of E￾payments in Financial System Sub-Purpose 2: Infrastructure for E￾payments Expanded Sub-Purpose 3: Enabling Environment for E-payments Improved Input: Transaction drivers Input: Digital infrastructure Input: Enabling environment Cross-cutting Sub-Purpose 4: Build eMoney Ecosystem by Expanding to All Regions of the Cities Development Initiative (CDI) USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 6 E-PESO has four activity sub-purposes: (1) rapid adoption of e-payments in the financial system, (2) expanded infrastructure for e-payments, (3) an improved enabling environment for e-payments, and (4) address gaps in the broader e-payment ecosystem5. The sub-purpose on adoption of e-payments relates to support for the digitization of government and business payment streams. Assistance to government involved improving service delivery through the use of e-payments in government transactions. Assistance to businesses involved making sure that entrepreneurs benefit from digital payments. The second sub-purpose concerns the expansion of the e-payments infrastructure. It involved working with the government and private sectors toward the establishment of digital payment services under the National Retail Payment System (NRPS)6. These services include digital bills payment systems, cash agent networks, and merchant payments. The sub-purpose on improving the enabling environment for e-payments relates to the support provided to the government, particularly the Bangko Sentral ng Pilipinas (BSP), in establishing and implementing an interoperable NRPS. This sub-purpose also includes support in terms of capacity building toward the promotion of security, consumer protection, and financial inclusion, among other elements. Finally, the sub-purpose on addressing gaps in the e-payment ecosystem involved supporting several cities identified under USAID’s Cities Development Initiative (CDI)7 as they expand their e-payment ecosystems. Two major events affected E-PESO’s implementation. The first was a reduction of its budget from the total estimated cost of $20.9 million to a total obligated amount of $12.8 million. The second was the COVID-19 pandemic emergency beginning in March 2020. 5 In the absence of access to the Project Appraisal Document, descriptions of the sub-purposes are based on the E-PESO Final Report. 6 The NRPS is a policy and regulatory framework whereby BSP provides regulatory oversight fundamentally in the form of policy direction to payment service providers. 7 The CDI is a USAID-supported project that aims to strengthen the economic competitiveness and resilience of cities outside of metro Manila. Under CDI, USAID provides a range of technical assistance based on the city’s most urgent needs. 7 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV EVALUATION METHODS AND LIMITATIONS METHODS The evaluation used a mixed-methods approach, combining qualitative and quantitative data analysis to answer the evaluation questions. It included review of project documents and other, related secondary sources and key informant interviews (KIIs). This section describes the data collection, data sources, and data analysis methods. The evaluation statement of work is in Annex A. A full description of the evaluation methodology, instruments, evaluation team composition, and timeline is in Annex G – Inception Report. Annex B provides the Evaluation Design Matrix, which summarizes the methodology used to answer each evaluation question. REVIEW OF PROJECT DOCUMENTS AND OTHER SECONDARY SOURCES The evaluation reviewed available E-PESO Activity documents, other secondary documents and data, and related news articles and videos. Activity documents include USAID’s Country Development Cooperation Strategy (CDCS) documents, the E-PESO Final Report, periodic monitoring reports, and other activity technical reports. Other, related documents include national and local government plans, government road maps, and Better Than Cash Alliance reports, among others. The evaluation also gathered secondary data from official statistics in government and private sector reports and websites. The evaluation used comparative and trend analysis of descriptive statistics to analyze the quantitative data to understand the sustainability of gains from E-PESO. The team also used official government reports, official press releases, and media reports to understand recent developments in the digital payment agenda. Annex C provides the list of project documents and secondary sources reviewed. KEY INFORMANT INTERVIEWS The team conducted KIIs to obtain informed responses to the evaluation questions. The evaluation purposively selected the respondents from E-PESO’s major counterpart organizations, participating local government units (LGUs), implementing partners, and the private sector8. A total of 13 informants from 8 organizations participated, as shown in Table 29. Given the COVID-19 restrictions, the evaluation team conducted KIIs remotely using USAID-approved video conference tools, such as Google Meet and Microsoft Teams. With consent from the key informant, interviews were recorded and transcribed for qualitative analysis. Because of schedule conflicts, one organization participated through written responses instead of an interview. 8 Based on discussions during the in-briefing, the Department of Interior and local government were removed from the list of major counterpart organizations. The cities of Tagbilaran (from Visayas) and Zamboanga (from Mindanao) were also identified as LGUs to be interviewed. 9 We invited The Bureau of Internal Revenue, a major government counterpart, but they were unable to participate. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 8 Annex D presents the list of key informants. LIMITATIONS The evaluation faced some limitations and challenges, including recall bias and respondents’ availability. As the evaluation was conducted about eight months after activity completion, KII responses may be incomplete. To address this issue, the evaluation team reinforced each interviewee’s responses with information derived from related documents. Given the short duration of the evaluation study, the team encountered issues with locating previous E￾PESO staff and securing meetings with key government officials. Such issues were expected, and the evaluation team commenced the KIIs early in the process to provide ample time for them. Nonetheless, some targeted KII respondents were not available, and the interviews were delegated to other respondents knowledgeable of E-PESO. One organization responded by written response to a customized interview questionnaire. Because of the limitations and challenges posed by the ex-post nature of this evaluation and the short timeframe for conducting the evaluation research, the evaluation team does not consider the evidence sufficiently robust to make recommendations. Instead, it provides lessons from E-PESO’s experience. TABLE 2. KEY INFORMAT INTERVIEWS CONDUCTED Organization Number of Respondents Bangko Sentral ng Pilipinas 2 Philippine Payments Management, Inc. 1 Department of Budget and Management 2 Department of Social Welfare and Development 2 Department of Trade and Industry 1 City of Tagbilaran 1 City of Zamboanga 1 Chemonics International, Inc. 3 TOTAL 13 9 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV FINDINGS This section presents the findings based on collected information for each evaluation question. RELEVANCE Evaluation Question: In what ways does E-PESO support the country's national development goals and USAID's country cooperation strategy objectives? The objectives of the E-PESO Activity remained aligned with national priorities, particularly in terms of financial inclusion and governance. During the start of the E-PESO Activity, the PDP 2011–2016, which has the overall goal of inclusive growth and poverty reduction, dedicated one chapter to a resilient and inclusive financial system. The plan targeted more efficient mobilization of financial resources, strengthened the regulatory framework for the financial system, and improved financial inclusion. In all these areas, E-PESO aligned well, given the activity’s goal of an “efficient, transparent and inclusive retail e-payment system contributing to broad-based growth.” The activity is also aligned with various strategies indicated in PDP 2017-2022. Under that plan, strategies to expand access to economic opportunities include the development of the country’s digital financial infrastructure to ready the financial system for a cash-lite economy and promotion of digital payments in both the government and the private sector. Strategies for sustaining a stable macroeconomic environment include fast-tracking implementation of tax reforms, such as the digital transformation agenda. Finally, strategies for good governance include technologies to strengthen anti￾corruption mechanisms. Tactics for ensuring seamless delivery of services include fast-tracking digitalization of frontline services and contactless transactions with the government. At the local level, the objectives of E-PESO support governance efforts and improving the ease of doing business. E-PESO helped partner LGUs make online platforms available for revenue collection, such as for businesses and property taxes. This support falls under Ease of Doing Business and Efficient Government Service Delivery Act of 201810 provisions, which require each LGU to transition to being an electronic business one-stop shop (eBOSS). An eBOSS is an online portal or website that can (1) accept online or electronic submission of applications; (2) electronically issue tax bills or orders of payment; (3) accept online payments; (4) issues electronic versions of permits, licenses, and clearances; and (5) provide gateways linked to courier services for applicants who prefer to receive hard copy permits. The objectives of the E-PESO activity remained aligned with USAID strategies for the Philippines. Under USAID’s CDCS 2013–2019, the E-PESO Activity is aligned with DO 1 or the United States–Philippines Partnership for Growth11 objective of broad-based, inclusive growth. The E￾10 The Republic Act (RA) 11032—An Act Promoting Ease of Doing Business and Efficient Delivery of Government Services mandates that all government offices and agencies improve their transaction systems and procedures. Business-related transactions must be automated through development of accessible, web-based software and technology-neutral platforms. 11 Signed in November 2011, the United States–Philippines Partnership for Growth is a bilateral partnership between the governments of the United States and the Philippines. The partnership was based on a shared commitment to addressing binding constraints to inclusive and sustainable growth. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 10 PESO Activity was expected to contribute to the sub-intermediate result, “Policy and Regulatory Environment Improved” and the intermediate result, “Economic Competitiveness Enhanced.” Under CDCS 2020–2024, USAID is prioritizing the Philippines’ journey to self-reliance—hence, the overall goal of “a well-governed and more self-reliant Indo-Pacific partner.” The E-PESO Activity is expected to contribute to DO 2, or “Inclusive, Market-Driven Growth Expanded.” Specifically, E PESO will contribute to the intermediate result, “Regulatory Quality Improved” by strengthening the enabling environment for the digital economy. The project objectives support international commitments, particularly of the sustainable development goals (SDGs). The transformative power of digital financial inclusion12 has been recognized by the United Nations (UN) as having the potential to support the achievement of 13 of the 17 SDGs13. Among many other pathways, digital financial inclusion allows efficient government transfers (contributing to SDG 1, “No Poverty”), empowers women to take greater control of their finances (contributing to SDG 5, “Gender Equality”), helps water utilities improve collection so that they can recover cost and supply water sustainably (contributing to SDG 6, “Clean Water and Sanitation”), and can help create more transparent and auditable records (contributing to SDG 16, “Peace, Justice, and Strong Institutions”). Annex E presents the digital financial inclusion opportunities for helping meet the 13 SDGs. The E-PESO Activity transferred knowledge to major government counterparts. Before the development of NRPS, interoperability among financial institution prevented the flow of funds from one institution to another. This structural barrier hindered payment streams among businesses, individuals, and governments and caused inefficiencies, which prevented sustained use of e-payments and financial inclusion. With support from USAID, an interoperable NRPS was conceptualized that received broad support from BSP and the payment industry. Then, it was formulated and implemented (see further discussion in the section “Effectiveness”). The E-PESO team gave BSP global perspective and technical expertise on digital payments. The project provided BSP with valuable inputs that paved the way for the development of the NRPS framework. Another example is the case of the Department of Social Welfare and Development (DSWD), whose mandate and expertise do not relate to financial endeavors. Assistance from the E-PESO Activity paved the way for DSWD staff and program beneficiaries to learn more about financial literacy and apply this information to achieving positive behavioral changes and financial independence. The COVID-19 pandemic proved to be a major driving force in shifting payment transactions to digital payments. With the COVID-19 outbreak, the use of digital payments evolved from a tool of efficiency to a tool of necessity. With the imposition of community quarantines and lockdowns, people resorted to using digital payments for their transactions. Further, the pandemic led to the formation of habits among users, who were forced to adapt and experience the benefits of digital payments. BSP data show that the number of money transfers that used PESONet and InstaPay 12 The Consultative Group to Assist the Poor (CGAP) defines digital financial inclusion as digital access to and use of formal financial services by excluded and underserved populations. 13 A UN compendium on digital financial inclusion presented pathways on how digital financial inclusion can support SDG targets for goals 1 through 11, 13, and 16. 11 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV significantly increased after community lockdowns. Data are presented in the section, “Effectiveness” (see Figure 2 to Figure 5). Google-commissioned Kantar Southeast Asia (SEA) e-Conomy Research 2021 demonstrated observed exponential growth in digital consumers in the Philippines, with approximately 12 million new digital consumers in the country since the start of the COVID-19 pandemic. Of these, 63 percent are from non-metro areas, and 99 percent expressed their intention to continue digital consumption. For pre￾pandemic users, or those who used the services before the pandemic, average consumption increased by 4.3 times since the pandemic began. On the seller side, about 97 percent of digital merchants surveyed accept digital payment. Further, approximately 39 percent expressed their belief that they would not have survived the effects of the pandemic if not for the digital platforms14. Alongside the increased use of digital payments, the COVID-19 pandemic highlighted that the digital ecosystem should be safe, efficient, and inclusive. It also emphasized the importance of information campaigns to advise the public of the various payment streams available to them and standard safety practices for making financial transactions online. In line with this emphasis, BSP is implementing a digital literacy program that promotes the use of digital payments and a cybersecurity awareness campaign15. Further, the pandemic revealed digital divide concerns, including infrastructure gaps that prevent equitable access for Filipinos. EFFECTIVENESS Evaluation Question: Did E-PESO achieve the four sub-purposes on the development of a lasting and inclusive economic infrastructure? What are the possible reasons for the successes and failures? Overall, E-PESO achieved the NRPS target for volume of digital payments. A BSP report16 released in 2021 showed that the volume of monthly digital payments reached 20.1 percent in 2020, slightly surpassing the NRPS goal of 20 percent by 2020. This achievement implies that the country is on track to meet the current national target of 50 percent by 2023, as indicated in the BSP Digital Payments Transformation Road Map (see the discussion in the section, “Sustainability”). Table 3 shows the trend in digital payments by volume and payer classification. Comparing 2013 with 2020 values, growth in digital payment for all payer types has been significant. Payments by individuals, which are characterized as high-frequency, low-value transactions, increased from 0.3 percent in 2013 to 23.4 percent in 2020, which was a major contributor to meeting the 2020 target considering that payments by individuals make up 78.1 percent of total payment volume. In terms of digital payments by businesses, growth has been slow, with a noted decline from 6 percent in 2019 to 5.4 percent in 2020, likely because of the pandemic. Finally, the government is the most cash-lite entity among payers, 14 Google, Temasek, and Bain. e-Conomy SEA 2021 Roaring 20s: the SEA Digital Decade. 2021. https://www.bain.com/globalassets/noindex/2021/e_conomy_sea_2021_report.pdf. 15 Raymond Estioko, Bridget Rose Mesina-Romero, Maria Christina Masangkay, Maureen Franco, Marco Luis de Larrazabal, Paulene Niña Bueno, Patricia Josette Lingat, and John Jerry Jaspio, Forging Pathways to a Cash-Lite Society: Status of Digital Payments in the Philippines, 2021 Edition, 2021, https://www.bsp.gov.ph/PaymentAndSettlement/BSP-Forging_pathways_to_a_cash-lite_society￾Status_of_Digital_Payments_in_the_Philippines_(2021_edition).pdf. 16 Ibid USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 12 suggesting that the government is setting an example of digitalization. Although government payments are just a small portion of the total volume (0.7 percent), 93.2 percent of all government payment were made digitally17. Source: Better Than Cash Alliance, Country Diagnostic: The State of Digital Payments in the Philippines, December 2019; Raymond Estioko, et al., Forging Pathways to a Cash-Lite Society: Status of Digital Payments in the Philippines, 2021 Edition, 2021. E-PESO achieved all three “desired impact” and two “desired purpose” indicators.18 Based on the E-PESO final report and the latest available data, the achieved “desired impact” indicators include (1) 81.4 million e-payment users (as of the end of 2019) against a target of 13.5 million; (2) 25.1 percent share of the adult population who are e-payment users against a target of 20 percent; and (3) seven financial products, tools, and services that were designed to meet the needs of low-income clients. The achieved “desired purpose” indicators include (1) the share of digital payments reached 10 percent by volume in 2018 against a target of 10 percent by the end of the project, with recent data showing that the share of digital payments further increased to 20 percent, and (2) 34.7 million active e-payment users reached in 2020 against a target of 12 million19. Annex E presents the accomplishments in detail. SUB-PURPOSE 1: RAPID ADOPTION OF E-PAYMENTS IN THE FINANCIAL SYSTEM Three of the four component indicators were achieved as of activity completion. The final report assessed the following indicators as achieved: (1) helped five agencies enable digital collection and disbursements20 (e.g., Bureat of Internal Revenue (BIR) expanding e-payment collection options, National Meat Inspection Services making online payments for permits available, the Department of Trade and Industry integrating its business name registration system with online and mobile payment services, the Social Security System implementing mandatory online transactions and checkless disbursements, and 17 Ibid 18 The desired impact indicator of “Transparency and efficiency of the retail payment system improved” was excluded because it was tracked under Outcome Indicator 3.1, “Financial regulation refined to manage growth of e- payments.” 19 The E-PESO Final Report assessed the indicator “number of active e-payment users” as not achieved based on the available data at that time (2019). This evaluation updated the accomplishment for the indicator with 2020 data (based on BSP’s Financial Inclusion Dashboard data) and assesses the indicator to be achieved. 20 Bureau of Internal RevenueBIR in expanding e-payment collection options, National Meat Inspection Services (NMIS) in making online payments for permits available, DTI the Department of Trade and Industry in integrating its business name registration system with online and mobile payment services, the Social Security System (SSS) in implementing mandatory online transactions and checkless disbursements, and DSWD the Department of Social Welfare and Development in the digitally disbursingement of the Social Amelioration Program TABLE 3. SHARE OF DIGITAL PAYMENTS BY VOLUME PAYER CLASSIFICATION 2013 2018 2019 2020 Individuals 0.3% 12.0% 15.3% 23.4% Businesses 1.3% 5.0% 6.0% 5.4% Government 54.0% 64.0% 80.0% 93.2% Overall 1.0% 10.0% 14.0% 20.1% 13 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV the Departement fo Social Welfare and Development digitally disburing the Social Amelioration Program; (2) provided research, advisory services, partnerships facilitation, and project management assistance to 11 LGUs (Quezen, Valenzuela, Purto Princesa, Legazpi, Tagbilaran, Zamboanga, Cagayan de Oro, Ligao, General Santos, Ubay, and Nabunturan; and (3) 1,483 businesses that used e-payments; (2) provided research, advisory services, partnerships facilitation, and project management assistance to 11 LGUs21; and (3) reached 1,483 businesses that used e-payments. The indicator on “number of people trained on the uses of e-payments” was reported not to have been achieved in the E-PESO Final Report, but the final report noted that the declared 75 percent accomplishment (11,962 actual vs. the 16,000 target) excludes DSWD’s financial literacy program training, which was then scheduled to commence shortly after the E-PESO Final Report was drafted in February 2021. Based on DSWD’s response to the KII for this evaluation, the department confirmed that three financial literacy sessions were conducted from March to May 2021. Each of the three sessions serviced about 3.8 million beneficiaries. E-PESO supported tax collection via digital channels. E-PESO assistance involved issuance of regulations enabling adoption of new electronic payment channels. These new channels cater to micro and small enterprises, which represent 90 percent of tax filers. E-PESO also worked with the Bureau of Internal Revenue (BIR) to undertake a communication drive encouraging taxpayers to use digital filing and payment channels during the government-imposed enhanced community quarantine (ECQ) because of COVID-19. The assistance resulted in significant growth in tax collection through digital channels. E-PESO helped enable electronic fund transfer as a payment option for national government agencies through the development of an e-learning system. E-PESO technical assistance to the Department of Budget and Management (DBM)22 involved helping to roll out the Budget and Treasury Management System (BTMS)23. Through the BTMS, more national government agencies can access PESONet, a service of government servicing banks, facilitating the shift from checks to digital payments. To roll out BTMS to all national government agencies, the DBM had to train about 2,600 users per year over six years. This requirement made traditional classroom training impractical, and an e-learning system was developed. The E-PESO Final Report cited that as of December 31, 2020, more than 4,000 learners from 100 government agencies were registered with the BTMS e-learning system. As of writing this report, the e-learning platform, which was originally intended for rolling out BTMS ended up being used for other purposes related to public financial management because BTMS was suspended. Because of certain procurement limitations, funding constraints, and changes in strategic direction, the DBM, on behalf of the Public Financial Management (PFM) Committee, decided to suspend 21 Quezon, Valenzuela, Puerto Princesa, Legazpi, Tagbilaran, Zamboanga, Cagayan de Oro, Ligao, General Santos, Ubay, and Nabunturan 22 The BTMS is the information system for the PFM operations of the Government of the Philippines. It is integrated, web based, and fully automated. It is also designed to streamline processing and monitoring of financial transactions in all government agencies through a centralized database. 23 The BTMS is the information system for the PFM operations of the Government of the Philippines. It is integrated, web based, and fully automated. It is also designed to streamline processing and monitoring of financial transactions in all government agencies through a centralized database. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 14 BTMS temporarily because the tool involved sizeable investment in product support and maintenance24. Because having an integrated financial management and information system is a reform that the government continues to pursue, the tool will be remodified, and the PFM Committee is already reviewing the reform road map for the integration of the financial management system. Despite the BTMS being suspended, the tool’s e-learning component is being reframed for other applications and capacity-building programs. This evaluation considers the development of the BTMS as something beyond the activity’s control. The e-learning platform remains useful and is currently being used for other purposes, such as the Budget Fora and PFM courses. The DBM is also planning to use the e-learning component for internal training, such as the basic courses the Department’s human resources group offers. Also, because of the efficiency and practicality e-learning offers, DBM has received inquiries from other government agencies about e-learning. E-PESO was instrumental in the digital disbursement of government relief grants during the COVID-19 pandemic. E-PESO helped DSWD use digital technologies to carry out the Social Amelioration Program (SAP)25. In partnership with government (i.e., DSWD and the Department of Information and Communications Technology [DICT]) and the private sector(i.e., Developers Connect Philippines, Amazon Web Services, PLDT Group, and Smart Communications, and SM Group, and the BDO Foundation), E-PESO facilitated the development of an application called ReliefAgad26. Designed for quick deployment during an emergency, the application has the capacity to expedite beneficiary registration and subsidy distribution by using digital payment systems27. In addition to being more efficient, the application made it safer for beneficiaries to access relief because it avoided crowding during registration and distribution. Design is people centric, featuring a customer support hotline and chat functionality. Further, those who do not own smartphones can still register by using someone else’s phone. For those without a bank account, DSWD can push the data to participating financial institutions to facilitate new account creation. By the end of registration in June 2020, 4.3 million beneficiaries had registered digitally, 1.1 million of whom (or 27 percent) enrolled their transaction account to facilitate digital payment of their cash relief. The E PESO Final Report also stated that by end of September 2020, 12.9 million beneficiaries28 had received cash relief amounting to US$1.7 billion (PHP83 billion). From this, 92 percent of beneficiaries were paid digitally using their transaction account. Further, 9.3 million new transaction accounts were 24 The BTMS is covered by product support and maintenance that expired in 2020. 25 The SAP is the government’s COVID-19 emergency subsidy to low-income families affected by the government￾imposed community quarantines in 2020. 26 The Developers Connect Philippines developed the software, Amazon Web Services provided cloud services, PLDT Group and Smart Communications provided website whitelisting, and SM Group and the BDO Foundation provided one-time password short message services. The Department of Information and Communications Technology provided information technology infrastructure and cybersecurity support. Banks and e-money issuers collaborated with the app team to identify ways to process new accounts seamlessly for app users. 27 Through ReliefAgad.ph, SAP beneficiaries can use their mobile phones to register their social amelioration card details and provide their transaction account details, if available. 28 This figure includes 4Ps beneficiaries qualified under SAP second tranche—beneficiaries who registered through LGUs and the ReliefAgad app. 15 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV created, effectively contributing to financial inclusion in the country. Beyond E PESO, the DSWD has ownership of the application, with unrestricted use in perpetuity. E-PESO supported the potential integration of financial inclusion in the government’s conditional cash transfer program. E-PESO helped DSWD integrate financial inclusion into the Pantawid Pamilyang Pilipino Program (4Ps)29 by (1) shifting the disbursement of grants from limited￾purpose cash cards to fully functional transaction accounts and (2) developing an enhanced financial literacy program30. In particular, E-PESO provided policy formulation support for adopting transaction accounts as a mode of payment for 4Ps cash grants and development of financial literacy modules. Having functional transaction accounts means that beneficiaries can now access financial services such as digital payments, savings, credit, investments and insurance. As of writing this report, actual implementation is still pending31. Full implementation of this initiative means the creation of 4.4 million transaction accounts for the beneficiaries, thereby increasing financial inclusion and potentially contributing to digital payment transactions. The evaluation team notes that the DSWD is committed to pursuing the conversion of limited-purpose cash cards to full-service transaction accounts32. Management of 4Ps is coordinated among concerned units within the DSWD and partner agencies to continue efforts toward the full adoption of transaction accounts. E-PESO supported payment adoption among businesses by connecting women entrepreneurs to the digital economy through training and a social media campaign. Under the USAID Women’s Global Development and Prosperity Initiative, E-PESO launched the Connecting Women to the Digital Economy (CWEDE) program, which aimed to help women entrepreneurs become online sellers. In partnership with the Department of Trade and Industry (DTI), the National Confederation of Cooperatives (NATCCO), Facebook, Shopee, and Lazada, the CWEDE program developed an integrated digital marketing training program (IDMTP)33 for women entrepreneurs. The training program was pilot tested to 436 trainees, of whom 349 women entrepreneurs actually opened online stores. The training was followed by an integrated social media campaign called “E-TAAS,” which 29 The 4Ps is a DSWDled program that provides conditional cash grants to the poorest of the poor to improve the health, nutrition, and child education. 30 Per the Implementing Rules and Regulations of RA 11310, “An Act Institutionalizing the Pantawid Pamilyang Pilipino Program,” the DSWD will provide beneficiaries with direct access to cash grants that is secured through transaction accounts from any authorized government depository bank. 31 For full implementation, the DSWD will have to issue the policy and roll out the financial literacy program to the 4.4 million 4Ps beneficiaries nationwide. 32 Raymond Estioko, Bridget Rose Mesina-Romero, Maria Christina Masangkay, Maureen Franco, Marco Luis de Larrazabal, Paulene Niña Bueno, Patricia Josette Lingat, and John Jerry Jaspio, Forging Pathways to a Cash-Lite Society: Status of Digital Payments in the Philippines, 2021 Edition, 2021, https://www.bsp.gov.ph/PaymentAndSettlement/BSP-Forging_pathways_to_a_cash-lite_society￾Status_of_Digital_Payments_in_the_Philippines_(2021_edition).pdf. 33 The IDMTP learning process and framework was developed as a 90-day mentorship program covering topics on the digital entrepreneurial mindset and principles; and concepts and trends on digital marketing; case studies on online selling and top e-commerce walkthroughs, from onboarding, learning creative content, tools and techniques, and troubleshooting. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 16 encourages micro, small, and medium enterprises (MSMEs) to go digital and consumers to support local products. E-PESO helped build the capacities of the DTI and NATCCO mentors by equipping them with knowledge and tools to sustain the training program beyond the E-PESO Activity. An operations manual on delivering IDMTP was developed. Further, the DTI institutionalized the training and expanded the scope to cover all MSMEs. The DTI will continue to implement the IDMTP as one activity under the Revitalizing Businesses, Investments, Livelihoods, and Domestic Demand (REBUILD PH) campaign34. REBUILD PH is the DTI’s strategy to recharge the economy despite the pandemic. In addition, E-PESO helped the DTI expand digital payment options for the new Business Name Registration System and assisted in drafting the e-Commerce Road Map 2020–2022. Finally, E PESO linked the Department to various partners with expertise in financial education as well as financial service providers. Even after the E-PESO engagement, the department are still in close collaboration with these partners. A current initiative by the DTI is the CTRL+BIZ Reboot Now! program, which aimed to encourage and help MSMEs to go digital. The program offers webinars for MSMEs, providing entrepreneurs with information about starting their business online. Another DTI initiative, which is yet to be launched as of writing this report, is called E-Bayad Mo and aims to promote digital payment. SUB-PURPOSE 2: EXPANSION OF INFRASTRUCTURE FOR E-PAYMENTS Based on the E-PESO Final Report, all three component indicators were achieved. The achieved indicators were (1) 79 institutions expanding their front-end infrastructures (against a target of 30), (2) 128 unique institutions connected to PESONet or InstaPay clearing switch operators (CSOs) and receiving electronic funds transfer credit instructions through the automated clearing houses (ACHs) (against a target of 30), and (3) six gap-analysis reports produced (against a target of 5). Annex E presents the accomplishments in detail. E-PESO supported the launch of eGovPay, a PESONet-enabled digital bill payment system for government collection. The benefits of using eGovPay include curbing revenue leaks, enhancing transparency, and promoting efficiency in the country’s revenue generation efforts. Government clients can use eGovPay by initiating payments through Land Bank of the Philippines’ Link.Biz portal, which directs them to the PayGate platform of the Philippine Clearing House Corp. This platform enables payors to choose the payment service provider from which funds will be transferred to the government through PESONet35. E-PESO involvement covered preliminary work, such as assistance to BSP in drafting the concept note, facilitation of workshops to formulate proposals, and implementing the pilot with the BIR as the 34 “Empowering women in digital through ‘E-Taas ang Pinay MSMEs’ campaign!” Republic of the Philippines Department of Trade and Industry, last modified February 10, 2021, https://www.dti.gov.ph/archives/news￾archives/e-taas-ang-pinay-msmes/. 35 Lawrence Agcaoili, “BSP wants all state agencies onboard EGove Pay this year,” The Philippine Star, July 9, 2021, https://www.philstar.com/business/2021/07/09/2111107/:~:text=MANILA,%20Philippines%20— %20The%20Bangko%20Sentral,spread%20of%20COVID-19%20infections. 17 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV merchant institution. From its launch in August 2019, eGovPay reached 387 government billers by the end of May 2021. According to BSP, this figure translates to 90 percent of total government billers scheduled to be captured in the digital platform for 202136. E-PESO assisted the payments industry with preparatory work for the establishment of an interoperable cash agent network. An interoperable cash agent network will increase touch points for customers of electronic money issuers (EMIs) to convert their cash to electronic value in their accounts and vice versa. In view of this opportunity, E-PESO conducted two studies: one a study on cash agent network (CAN) sharing models, with recommendations for the Philippines, and one a study on shared CAN (SCAN) payment-use cases. E-PESO also facilitated workshops to determine and agree on the principles of interoperability of agents, structure, and governance of a CAN provider, governance of SCAN, core service standards, and interchange fee setting and billing. The activity submitted to BSP and Philippine Payments Management, Inc. (PPMI) a proposal package that included the draft multilateral agreement and the two aforementioned studies. E-PESO supported the launch of the BIR’s Electronic Tax Software Provider Certification (eTSPCert) System, an online certification system that will authorize and verify third-party providers of electronic tax solutions. Launched in December 2018, the eTSPCert System is BIR’s online platform, which TSPs can use for the application and certification of tax solutions. The system ensures that the software TSPs use complies with BIR requirements. The whole process is completely online and covers document submission, BIR verification, approval of applications, downloading of development tools, submission of test outputs, and BIR certification. E-PESO contributed project management support, provision of inputs to the system’s technical design, and provision of policy bases for the system’s rollout. The availability of BIR-compliant tax software will provide taxpayers with alternative electronic tax filing options other than eBIRForms. Because the TSPs can develop e-filing and e-payment software with more user-friendly interfaces, taxpayers will benefit, as well. It is also expected to translate to improved tax collection efficiency. As of project completion, the BIR issued certifications to two TSPs covering 10 certified forms. E-PESO supported the BIR’s digital transformation drive to simplify forms and streamline processes for taxpayers through the Hack-A-Tax innovation challenge. The Hack-A-Tax challenge is a nationwide competition to develop digital applications that facilitate faster and more convenient digital transactions with the BIR. From the 175 proposals received, 12 finalists were selected, and 3 solutions were declared winners. To enable the competition finalists to launch their products, E PESO worked with the BIR to develop application program interfaces and the payment portal needed. This partnership with the private sector, particularly information and communication technology (ICT) firms and the software development community, to create digital solutions for taxpayers addressed several challenges that the BIR faced in implementing its digital transformation drive. These challenges 36 Lee C. Chipongian, “Onboarding of EGov Pay 90% done—BSP,” Manila Bulletin, July 8, 2021, https://mb.com.ph/2021/07/08/onboarding-of-egov-pay-90-done￾bsp/#:~:text=Business%20NEWS&text=%E2%80%9CAt%20end%2DMay%20this%20year,Diokno%20announced%20 Thursday. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 18 included the capability to undertake ICT projects involving the latest technologies, maintaining systems to keep pace with rapidly changing technology standards, and the government’s bureaucratic procurement process. SUB-PURPOSE 3: IMPROVEMENT OF THE ENABLING ENVIRONMENT FOR E-PAYMENTS Based on the E-PESO Final Report, E-PESO achieved all nine component indicators;. The indicators include (1) supported the refinement of 24 circulars, regulations, or local ordinances that are supportive of e payment growth; (2) held 37 roundtables or consultation meetings with various stakeholders, including regulators, businesses, and financial institutions; (3) removed or added 6 policies to reduce barriers and encourage competition in e-payments; (4) achieved interoperability in the national payment system; (5) raised awareness of e-payment among 81 percent of the population aged 15 years and older; (6) raised trust in the e-payment system among 75 percent of the population aged 15 years and older; (7) conducted 10 activities to promote awareness of digital security best practices or consumer protection; (8) published 287 articles promoting e-payments; and (9) held 21 global knowledge-sharing events that highlight the Philippines’ e-payment environment and players. Annex E presents the accomplishments in detail. E-PESO helped the BSP formulate the NRPS, a governance and regulatory framework for a safe, reliable, efficient, and interoperable retail payments system. In November 2017, the BSP issued Circular No. 980, “Adoption of the NRPS Framework.” Built on the principles of interoperability, inclusivity, and cooperation, the framework aims to promote the use of e-payments37. The contribution of E-PESO is that the activity deliberated with and provided reports to the assigned BSP team in formulating the principles, policies, rationale, and guidelines used as inputs to regulations38. Notably, the NRPS was conceptualized with BSP under a previous USAID-supported activity, the Scaling Innovations in Mobile Money (SIMM) Project39. Implemented from April 2012 to January 2015, the SIMM Activity aimed to increase financial inclusion by boosting adoption and use of mobile money. It was observed then that the lack of interoperability, which will allow funds from accounts in other banks or EMIs to flow to and from mobile money accounts, has kept mobile money from reaching scale. This 37 Interoperability enables customers to transfer funds from their account to any other transaction account. Inclusivity requires that all qualified financial service providers participate in the system to foster greater competition and innovation. Cooperation means industry is expected to cooperate in matters that directly affect the shared objectives of system efficiency and resilience while still competing on product features. 38 Policies, guidelines, and regulations include adoption of (1) the NRPS framework; (2) PPMI; (3) guidelines of the NRPS key principles and specific rules applicable thereto; (4) disclosure of fee on electronic payments pursuant to Circular No. 980; (5) guidelines on the settlement of instant retail payments; (6) availability of InstaPay and PESONet in all existing electronic delivery channels; (7) amendments to Part 8 of the Manual of Regulations for Banks/Manual of Regulations for Non-Bank Financial Institutions and Circular No. 980; (8) frequently asked questions on anti-money laundering–related concerns on the adoption of the NRPS framework; (9) personnel education on and publication of PESONet and InstaPay information; and (10) amendments to regulations on electronic banking services and other electronic operations. 39 The SIMM project proposed to BSP the vision of a safe and interoperable national payment system. BSP supported the vision and recommended that SIMM start with (1) articulating a global best-practices framework that will ensure the safety and soundness of the national payments system and (2) obtaining broad consensus among the payments industry players to implement it. SIMM and BSP also agreed to focus the scope on retail payments only because these payments are critical to achieving the goal of financial inclusion. 19 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV structural barrier has denied the benefits of network effects because the mobile money services remain as closed loops, where their consumers and merchants have to be in one payment scheme only. To address this challenge, SIMM supported the BSP in initiating and leading industry-wide advocacy toward having an inclusive, efficient, and interoperable NRPS. The envisioned NRPS will allow electronic flow of funds from any account to another using any participating financial institution. The SIMM Activity engaged National Payments System (NPS) experts to provide knowledge on the structure and framework of the desired NPS and provide guidance on how the Philippines can achieve it. The SIMM project also sponsored NPS courses to create awareness and understanding of the subject, stimulate discussions, and establish a national agenda for NRPS among BSP officials, other government officials, and financial industry leaders. Planning workshops were also held among BSP officials and financial industry leaders to reach a broad consensus on the vision behind NRPS and the possible means of achieving it. The BSP and the financial industry widely supported the concept of implementing an inclusive, efficient, and interoperable NRPS. Implementation of an interoperable NRPS should not only promote financial inclusion but also improve gross domestic product. Based on the workshops and information obtained from the BSP and the financial industry, SIMM submitted to the BSP the guiding principles on establishing a Payments System Management Body (PSMB) and risk management framework, the guiding principles and economic model of a single national utility clearing operator, and the plan of work for key streams in moving toward NRPS40. With E-PESO’s assistance, the BSP and the payments industry launched two ACHs— namely, PESONet and InstaPay. Under the NRPS framework, all significant payment streams are required to be covered by an ACH, which ensured the interoperability of digital payment services. An ACH is a multilateral, legally binding agreement on the clearing and participation rules for a specific payment stream to facilitate digital fund transfers among participants. ACHs allow an accountholder of one BSP-supervised financial institution (BSFI) to transfer funds to any other account of another BSFI, including non-banks. E-PESO provided policy formulation support to the BSP as it established the ACHs under the NRPS. The COVID-19 pandemic hastened the adoption of digital payments. Figure 2 and Figure 3 present the PESONet41 volume and value transactions since its launch in November 2017. The solid blue line represents the actual transactions, while the dotted blue line represents the linear trend. These lines show a remarkable increase in transactions. The observed growth was evident after the lockdowns, which occurred in March 2020. The volume of transactions increased from 0.3 million in November 2017 to 1.2 million in March 2020, reaching 6.6 million in November 2021. In terms of value, this rise translates to about US$1 billion (PHP53 billion) in November 2017 to approximately US$2.9 billion (PHP149 billion) in March 2020 to about US$8.8 billion (PHP442 billion) in November 202142. To determine the possible impact of COVID-19 on the adoption of PESONet transactions, the evaluation team estimated the values for March 2020 onwards to illustrate what would have been the 40 Development Alternatives, USAID/Philippines Scaling Innovations in Mobile Money (SIMM) Project: Final Report, December 16, 2014, https://pdf.usaid.gov/pdf_docs/PA00KF87.pdf 41 PESONet is a batch/bulk electronic funds transfer facility that allows same-day full-value credit of funds. 42 All conversions to USD made at an approximate current exchange rate of PHP50/USD. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 20 trend based on pre-COVID-19 lockdown data (i.e., November 2017 to February 2020) using basic linear trend analysis. This estimated trend is illustrated by the dotted red line. As expected, the actual trend is significantly higher than the estimated trend using pre-lockdown data. Nonetheless, the estimated trend shows a respectable increase in the number of transactions. The same pattern holds for InstaPay43 transactions (Figure 4 and Figure 5). Further, InstaPay’s growth was more remarkable, particularly after the imposition of lockdowns. The total volume of transactions grew from 1,740 (amounting to approximately US$382,000 [PHP19.1 million]) in April 2018 to 7.1 million (amounting to about US$922 million [PHP46.1 billion]) in March 2020 and eventually reached 42.8 million (amounting to approximately US$5.4 [PHP270.2 billion]) in November 202144. This rise may have resulted from InstaPay transactions being transferred instantly and smaller in value (i.e., less than US$1,000 [PHP50,000]) and likely being used more during the pandemic than PESONet. Figure 2. PESONet Volume (November 2017–November 2021) Source: BSP Figure 3. PESONet Value (November 2017–November 2021) Source: BSP. 43 InstaPay is a real-time, low-value electronic funds transfer facility that allows accountholders to send and receive funds to PHP50,000. 44 All conversions to USD made at an approximate current exchange rate of PHP50/USD. - 100 200 300 400 500 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Billions Value Trend (Actual Value) Trend (Pre-lockdown data) Start of lockdowns 0 1 2 3 4 5 6 7 8 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Millions Volume Trend (Actual Volume) Trend (Pre-lockdown data) Start of lockdowns 21 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV Figure 4. InstaPay Volume (April 2018–November 2021) Source: BSP. Figure 5. InstaPay Value (April 2018–November 2021) Source: BSP. Further, InstaPay volume overtook ATM withdrawals starting in August 2020, except in November and December 2020, when a series of typhoons may have affected access to digital payment services. With the relatively stable trend of checks and assuming that use PESONet will steadily increase, PESONet may approach check volume over time45. 45 Raymond Estioko, Bridget Rose Mesina-Romero, Maria Christina Masangkay, Maureen Franco, Marco Luis de Larrazabal, Paulene Niña Bueno, Patricia Josette Lingat, and John Jerry Jaspio, Forging Pathways to a Cash-Lite Society: Status of Digital Payments in the Philippines, 2021 Edition, 2021, https://www.bsp.gov.ph/PaymentAndSettlement/BSP-Forging_pathways_to_a_cash-lite_society￾Status_of_Digital_Payments_in_the_Philippines_(2021_edition).pdf 0 10 20 30 40 50 Millions Volume Trend (Actual Volume) Trend (Pre-lockdown data) Start of lockdowns - 50 100 150 200 250 300 Billions Value Trend (Actual Value) Trend (Pre-lockdown data) Start of lockdowns USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 22 E-PESO supported the creation of a payment systems management body, which became the PPMI46. The project recommended to the BSP the creation of a payment systems management body as part of the NRPS framework. The creation of PPMI will drive cooperation among participating institutions toward achieving the goal of NRPS—a safe, reliable, efficient, and interoperable retail payments system. PPMI is a self-governing body tasked with helping the BSP oversee NRPS implementation by enforcing its governance framework. The payment industry, through PPMI, develops and implements standards that are aligned with the NRPS47. The specific tasks of PPMI are (1) to standardize clearing agreements and ensure that all payment streams are covered by a multilateral ACH agreement; (2) to enforce members’ compliance with criteria, standards, and rules that PPMI has promulgated and adopted; (3) to identify and undertake industry initiatives to support NRPS; (4) to monitor systemwide risks; and (5) to prepare reports for oversight48. Through the creation of a PSMB, previously excluded actors (i.e., thrift and rural banks, non-banks) are now allowed to participate in the formulation of rules that affect the entire payment industry. Any BSFI that wishes to participate in clearing (e.g., PESONet and InstaPay) must join PPMI. Figure 6 shows that the number of PPMI members has increase over time. From a total of 74 members in October 2019, membership reached 141 in August 2021. During the same period, significant growth was observed for rural banks in particular (from 11 in October 2018 to 43 in August 2021) and EMIs (from 5 in October 2018 to 25 in August 2021). Figure 6. PPMI Membership (2018–2021) Source: E-PESO Final Report and PPMI website. 46 On August 2, 2020, PPMI was accredited as a PSMB under the National Payment Systems Act (NPSA). The NPSA was passed into law in July 2018. 47 “About us,” Philippine Payments Management, Inc., 2021, https://www.philpayments.org.ph/ourwork 48 Bangko Sentral ng Pilipinas, National Retail Payment System, accessed January 26, 2022, https://www.bsp.gov.ph/PaymentAndSettlement/FAQ_NRPSFramework0623.pdf 41 41 43 43 17 23 24 28 11 18 23 43 5 6 10 25 2 74 88 100 141 0 20 40 60 80 100 120 140 160 A s o f O c t 2 0 1 8 A s o f O c t 2 0 1 9 A s o f O c t 2 0 2 0 A s o f 1 2 A u g 2 0 2 1 Cooperative banks Electronic Money Issuers (EMIs) Rural Banks Thrift Banks Universal/Commercial Banks TOTAL 23 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV E-PESO conducted a root cause analysis and provided recommendations for meeting the challenges that prevent businesses from shifting to e-payments. The study was prompted by the slow adoption of e-payment among businesses (see Table 3). Based on the study, barriers to adoption were classified into the following areas: regulatory, behavioral, ecosystem environment, financial, and customer experience49. In particular, the requirement that businesses keep hard copies of receipts and invoices was identified as a taxpayer pain point and hinders the shift from checks and cash to digital options. To address these barriers, E-PESO recommended the following solutions: (1) Implement e invoicing; (2) allow transmission of relevant commercial information and more payment information from the payer to the payee; and (3) clarify liabilities in case of anomalous transactions. E-PESO presented and submitted for the BIR’s consideration the Blended E-Invoicing System (EIS) and Pan European Public Procurement Online (PEPPOL) e-invoicing solution50. The BIR is set to pilot its electronic receipts and e-invoicing system among 100 taxpayers in 202251. Under the Tax Reform Acceleration and Inclusion law, which was signed into law in December 2017, e-receipts and e invoices should be implemented within five years after its effective date. To further strengthen BSP’s cybersecurity capability, E-PESO helped BSP conduct a cybersecurity policy review, capacity building, and compliance monitoring. In particular, E￾PESO was responsible for the following deliverables with BSP: (1) cybersecurity policy review52; (2) capacity building; (3) assessment of BSFIs’ readiness to comply with information security guidelines53; (4) 49 The E-PESO Final Report cited that the root causes of these barriers were (1) regulatory compliance— businesses need to secure hard copies as evidence of revenue and expenses in compliance with regulatory requirements; (2) business requirement and cost-efficiency—businesses must be able to collect accurate transaction- and payment-related information efficiently for purposes of posting and reconciliation while complying with regulatory requirements; and (3) transaction certainty and accuracy—businesses must be assured that payments will be successful and that suitable protection exists in case of anomalous or erroneous transactions. 50 The Blended EIS-PEPPOL E-Invoicing Solution is deemed advantageous because (1) the BIR stays as a regulator only and does not become both a regulator and an operator of an e-invoicing system for the market; (2) it minimizes cost of ownership; (3) it is the most efficient and affordable e-invoicing solution for the BIR, businesses, and government agencies; (4) it optimizes ease of doing business and productivity; and (5) it facilitates cross-border trade and improves the international competitiveness of Philippine businesses. 51 Raymond Estioko, Bridget Rose Mesina-Romero, Maria Christina Masangkay, Maureen Franco, Marco Luis de Larrazabal, Paulene Niña Bueno, Patricia Josette Lingat, and John Jerry Jaspio, Forging Pathways to a Cash-Lite Society: Status of Digital Payments in the Philippines, 2021 Edition, 2021, https://www.bsp.gov.ph/PaymentAndSettlement/BSP-Forging_pathways_to_a_cash-lite_society￾Status_of_Digital_Payments_in_the_Philippines_(2021_edition).pdf 52 The cybersecurity policy review in 2018 involved the analysis of BSP’s Circular No. 982, “Enhanced Guidelines on Information Security Management.” The guidelines were assessed vis-à-vis international standards (e.g., ISO 27001, “Information Security Management System, Cyber Resilience Framework–Committee on Payment and Market Infrastructures, National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity, and the Payment Card Industry–Data Security Standard”). 53 Capacity building includes training on (1) securing and auditing the cloud environment; (2) security of ATMs and the online/mobile banking environment and other emerging channels; (3) basic concepts on the Payment Card Industry Data Security Standard; and (4) cybersecurity essentials and the Cybersecurity Assessment Framework. Participants from BSP included representatives from the Technology Risk & Innovation Supervision Department, Information Technology, the General Examination Department, and the Payment Systems Oversight Department. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 24 a solution to assess BSFIs’ cybersecurity risk management54; and (5) development of a Cybersecurity Capability Maturity Model55. Findings from the cybersecurity policy review show that current BSP regulations on cybersecurity comply with the cyber resiliency framework of the National Institute of Standards and Technology (NIST) and the Bank for International Settlements. Based on the review, BSP’s current guidelines have more than adequate requirements and controls to address cybersecurity and information security risks. The cybersecurity readiness of financial institutions, however, has room for improvement. Monitoring the compliance of the BSFIs with cybersecurity policies led BSP to implement the Governance, Risk Management, and Compliance (GRC) regulatory technology system within the banking industry. The GRC solution is a unified RegTech and SupTech solution56 that will streamline and automate regulatory supervision, reporting, and compliance assessment of BSFIs’ cybersecurity risk management. E-PESO formulated and implemented the cybersecurity awareness campaign “E-Safety is Everyone’s Responsibility.” In view of the rapid adoption of digital payments during the pandemic, E￾PESO began promoting good cyber hygiene practices to maintain and increase users’ trust in digital payments. The campaign contains (1) e-safety responsibilities for users, which aims to educate users on how to avoid being hacked or scammed online; (2) e-safety responsibilities for BSP and BSFIs to assure users that BSP and its supervised financial institutions are working to protect users from cyberattacks; and (3) e-safety recourse for users in the event of cyberattacks and security breaches. BSP has adopted the campaign as part of its ongoing digital literacy program. SUB-PURPOSE 4: ADDRESSED GAPS IN BROADER E-PAYMENT ECOSYSTEMS E-PESO helped 11 partner cities and municipalities offer digital payments for local taxes. E￾PESO provided research, advisory services, partnership facilitation, and project management assistance to 11 partner LGUs (Quezon, Valenzuela, Puerto Princesa, Legazpi, Tagbilaran, Zamboanga, Cagayan de Oro, Ligao, General Santos, Ubay, and Nabunturan). By the end of E-PESO implementation, all partner LGUs had digital payment options for business taxes; some also include real property taxes, market stall fees, construction permits, and traffic violation tickets. Some LGUs were also planning to expand to include water bills. Based on KII responses from this evaluation, Tagbilaran City is offering digital payment of local taxes, making the city compliant with eBOSS. In contrast, Zamboanga is back to a cash￾only option pending enhancement of its system. E-PESO helped build the capacity of partner LGUs in digital and social media marketing for digital payment promotional campaigns. E-PESO held a workshop series on “Social Media and Promotions Planning for E-Payments.” The workshop addressed lack of awareness of e payment services, which is the main reason these services are not used based on the BSP Financial Inclusion Survey. E PESO focused on social media marketing because Filipinos top the global survey on time spent 54 E-PESO provided assistance in sourcing potential vendors and developing the Request for Quotation and Terms of Reference for its Advanced SupTech Engine for Risk-based Compliance, the BSP’s GRC solution. 55 The E-PESO Activity developed a proposed Cybersecurity Capability Maturity Model that may adopt consistent with the NIST for the industry and BSFIs. 56 RegTech, or regulatory technology, is a technology solution designed to help a financial institution manage regulatory compliance. SupTech, or supervisory technology, is a technology solution designed to help supervisory agencies manage regulatory compliance. 25 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV on social media57. The workshops equipped partner LGUs with the capacity to design effective promotional campaigns. FACTORS CONTRIBUTING TO SUCCESSES AND CHALLENGES BSP’s commitment to the agenda enabled it to lay the groundwork for digitalization. The NRPS was possible because of BSP’s commitment to the vision of a safe and interoperable national payment system. Although E-PESO provided the research and analysis, facilitated the process, and came up with recommendations, it was BSP’s decision to adopt the recommendations and implement the reforms. BSP influenced the payments industry by soliciting participation of market players in the NRPS and drove government agencies’ adoption of digital payments. Institutional champions played an important role by taking ownership and championing the activities. These champions paved the way for buy-in across the organization, mobilization of resources to support project activities, and smoother implementation in general. In particular, BSP’s leadership exercised political will in implementing the necessary reforms to modernize the payments industry. The E-PESO Final Report also recognized the presence of champions in other major counterpart organizations (e.g., the BIR for the digital transformation drive and adoption of digital payments and the DSWD for its adoption of digital payments and integration of financial inclusion in social subsidy programs). E-PESO engaged the private sector as partners in solving development problems. By partnering with the private sector, whose objectives were aligned with the project objectives, E PESO used its resources effectively58. This partnership was illustrated in several of E-PESO activities. First, in the case assisting the BIR, the private sector helped develop payment solutions to facilitate digital payment of taxes. This partnership with the private sector addressed the challenges the BIR faced in implementing ICT projects using the latest technologies, maintaining systems, and managing a long procurement process. With regard to assisting the DSWD, the private sector helped co-create a digital solution to solve inefficient beneficiary registration and cash relief distribution. Through private sector partnership, the project delivered the ReliefAgad application without additional costs for systems development. Finally, in the case of the partnership with the DTI and private sector (e.g., Lazada, Shopee, Facebook) to train women entrepreneurs to be online sellers, interest in onboarding MSMEs and using the e-commerce platforms was the partnership’s common objective. The E-PESO Activity successfully transferred knowledge to major government counterparts. The E PESO team shared a global perspective on digital payments and provided BSP with the technical expertise and valuable inputs to develop the NRPS framework. Among others, the E PESO team helped in the (1) formulation of payment rules, policies, clearing, and settlement processes; (2) identification of legal and regulatory gaps; and (3) the digital transformation road map. 57 Filipinos spend 3 hours, 57 minutes per day, according to the Global Web Index (January 2019 data) based on a survey of Internet users aged 16 to 64 years. Fifty-nine percent, or 62 million of a total 105.7 million population, are active on social media. 58 Development Alternatives, USAID/Philippines Scaling Innovations in Mobile Money (SIMM) Project: Final Report, December 16, 2014, https://pdf.usaid.gov/pdf_docs/PA00KF87.pdf USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 26 In the case of the DSWD, whose mandate and expertise do not relate to financial endeavors, assistance from E-PESO paved way for staff and program beneficiaries to improve their financial literacy and apply this knowledge to achieve positive behavioral changes and financial independence. E PESO also linked government agencies (e.g., the DSWD and DTI) to various partners with expertise in financial education and financial service provision. Even after the E-PESO engagement, the departments are still in close collaboration with these partners. E-PESO implementation has been highly adaptive amidst uncertainties brought about by the COVID-19 pandemic and changes in funding. When COVID-19 appeared, the resulting community lockdowns affected E-PESO implementation. Restrictions put on hold activities such as events, workshops, and field visits. The E-PESO team resorted to online meetings, webinars, and collaboration tools with businesses and institutions. As a result, most of E-PESO’s activities resumed two months after the announcement of the ECQ. Activities conducted virtually include the DSWD’s Financial Literacy Program Writeshop, the BIR’s Hack-A-Tax innovation challenge final demo and pitching, and the BIR’s Hack-A-Tax awarding ceremony. E-PESO also refocused its activities to COVID-19 response projects. E-PESO supported the DSWD’s implementation of the SAP through the development of a mobile application that facilitated quick registration and distribution of aid. E PESO also supported the implementation of a public awareness campaign to strengthen preference for digital payments, including (1) supporting the DSWD on the SAP Communications Campaign, particularly on eligibility requirements, the registration process, and cash grant distribution; (2) working with the BIR on the Electronic Filing and Payment Promotions Campaign to encourage the use of e-filing and e-payment channels in settling accounts with the Bureau; and (3) working with BSP on the Financial Literacy Campaign to promote the use of e payments during ECQ59. During its implementation, E-PESO encountered a funding constraint. Only 60 percent of its contract ceiling was available. Nevertheless, the activity met most of the indicators by project completion. E PESO also partnered with the private sector, which allowed the project to use that sector’s resources. The E-PESO team effectively engaged stakeholders through consultations and dialogue. Recognizing the low adoption of digital payments among businesses, the project held consultations with various stakeholders (i.e., regulators, private businesses, government agencies, financial institutions) to identify the root causes. This work was an input to the revenue regulation and business process review on how to address the needs of various stakeholders. By engaging multiple stakeholders (i.e., BSP as regulator and supply-side players or financial service providers as well as demand-side partners and clients), regulatory questions on technical implementation issues were resolved quickly. Government partners recognized the E-PESO team as client oriented. Recognition of the partnership and support the E-PESO team provided was clear based on responses from KIIs. Government partners regarded the E PESO team as experts in the field as well as highly consultative and facilitative. 59 Development Alternatives, USAID/Philippines Scaling Innovations in Mobile Money (SIMM) Project: Final Report, December 16, 2014, https://pdf.usaid.gov/pdf_docs/PA00KF87.pdf 27 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV Challenges during implementation related to funding constraints, understanding the dynamics of local payment service providers, and seeming preference for cash over digital options. The E-PESO Activity encountered a funding constraint during its implementation. Only 60 percent of its contract ceiling was available. Initially, there were efforts to downgrade the targets, but USAID and E-PESO agreed not to make these changes in the hope that more funds would be available later60. Another challenge was dealing with the dynamics of local payment service providers (e.g., big banks, small banks, and EMIs), which have the tendency to keep information to themselves. This behavior is expected because competitors coming together to make working together easier is a big task. In relation to E PESO’s assistance to the DSWD, there was a seeming preference for cash at the distribution level for the SAP that hindered e-payment adoption among beneficiaries. SUSTAINABILITY Evaluation Question: What evidence supports the likelihood that the benefits of E-PESO will extend past the activity’s period of performance? What considerations should future similar activities take into account? The digitalization agenda is backed by policies: Some exist already, and some are pending enactment. Among the relatively recently enacted legislation are the Philippine Identification System Act and the Ease of Doing Business and Efficient Government Service Delivery Act. The Philippine Identification System Act, which was signed into law on August 6, 2018, aimed to establish a single national identification system for all citizens and resident aliens of the Philippines61. It addressed the lack of a valid identification document as a major reason why some Filipinos remain without bank accounts. As of November 8, 2021, 5.9 million Filipinos previously without bank accounts have opened an account under this arrangemen62. The enactment of the Philippine Identification System is significant given that financial inclusion and digitalization of payment are mutually reenforcing. Sustainability of adoption by LGUs is expected because of the Ease of Doing Business and Efficient Government Service Delivery Act of 201863. In accordance with this act, a joint memorandum circular (JMC) on the “Guidelines for Processing Business Permits, Related Clearances and Licenses in the New Normal in All Cities and Municipalities” was issued, which directs LGUs to transition to eBOSS by June 60 Discussed during the May 20, 2021, consultation meeting with the AOR on E-PESO and PRM as part of the preparation of the SOW on the evaluation of E-PESO. 61 The availability of a national ID is envisioned to simplify public and private transactions, resulting in seamless social service delivery and greater financial inclusion. As a foundational digital ID system, PhilSys is expected to accelerate transition to a digital economy by enabling presenceless, paperless, and cashless transactions. 62 Bangko Sentral ng Pilipinas, “Basic Deposit Account up 51% in Q1,” November 7, 2021, https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=6013 63 This act refers to RA 11032, which mandates all government offices and agencies for the assessment and improvement of their transaction systems and procedures. In addition, their business-related transactions must be automated through the development of accessible, web-based software and technology-neutral platforms in collaboration with the DICT. The DICT is responsible for establishing, operating, and maintaining a Central Business Portal—an online system that receives and captures applications and data involving business transactions from different government agencies, including the BIR. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 28 17, 202164. In a press release by the Anti-Red Tape Authority, the agency eyes 100 percent LGU compliance by the end of the current president’s term (i.e., May 2022). Other, related legislation is pending enactment as of writing this report. These pending bills are important for ensuring that digital transformation will be backed by available infrastructure, efficient governance, and a future-ready workforce. This legislation includes (1) the Open Access in Data Transmission Act, which aims to modernize the country’s telecoms regime; (2) the Internet Transactions Act, which seeks to create the Electronic Commerce Bureau under the DTI to regulate e commerce transactions in the country; (3) the Digital Taxation Value Added Tax on Digital Transactions Act, which aims to impose taxes on digital services; and (4) the National 30 Year Infrastructure Program Act, which seeks to provide a framework for the continuing development across government administrations of essential transport, energy, water resources, ICT, social infrastructure systems, and other basic overhead facilities in the country65. Another pending bill is Senate Bill 1764, Use of Digital Payments Act. The bill aims to facilitate transactions, arrangements, or exchanges of goods and services by promoting the universal use of safe and efficient digital payment in financial transactions. The act will mandate the use of digital payments, particularly in all government agencies, offices, and LGUs. The LGUs will also, by ordinance, require that merchants be able to receive digital payments as a prerequisite for business permits. The thrust to shift to digital payment is embedded in institutional road maps. The BSP has the Digital Payments Transformation Road Map 2020–202366, which identified the targets, strategies, and schedule. The road map is evidence based and clearly outlines action items to be prioritized in the areas of (1) digital payment streams, (2) digital finance infrastructure, (3) digital governance and standards, (4) enabling the policy and regulatory environment, (5) digitally transformed BSP, and (6) strategic communication. The BSP road map targets are (1) to convert at least 50 percent of all transactions to electronic channels by 2023 and (2) to expand financially included adults to 70 percent. No figures are available yet, but the BSP is confident that it will meet the targets67, with the BSP governor announcing that targets will be met before the end of 202268. 64 The JMC is a joint initiative of the DICT, Anti-Red Tape Authority (ARTA), DTI, and the Department of Interior and Local Government (DILG). The JMC covers all cities and municipalities; the Bureau of Fire Protection; regional offices of the DICT, DTI, DILG, and ARTA; and all other agencies involved in the business licensing and processing of LGUs. 65 This enumeration is based on the desk review under this evaluation and may not be exhaustive of all related laws and bills. 66 Bangko Sentral ng Pilipinas, BSP Digital Payments Transformation Roadmap 2020-2023, accessed January 26, 2022, https://www.bsp.gov.ph/Media_And_Research/Primers%20Faqs/Digital%20Payments%20Transformation%20Roadm ap%20Report.pdf 67 Based on KIIs, the following are indications that targets will be met: (1) With the pandemic as a catalyst, e￾payments emerged as the preferred, most used mode of payment, and (2) there was an observed higher-than￾projected PESONet and Instapay volume and an increase in new adaptors of digital services. Further, these indications are coupled with BSP initiatives to intensify consumer awareness campaigns and encourage consumers and institutions to use digital payments and financial services. 68 Bangko Sentral ng Pilipinas, “BSP Gov. Diokno Says BSP to Hit Digitalization Targets in 2022,” May 31, 2021, https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=5804 29 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV In 2020, the BIR issued Revenue Memorandum Order No. 27-2020, “BIR Digital Transformation (DX) Road Map 2020–2030” in compliance with the Ease of Doing Business and Efficient Government Service Delivery Act of 2018. The DX Road Map enumerates the programs, outcomes, and corresponding timelines that will facilitate the BIR’s mission to improve revenue collection. The DTI also has the e Commerce 2022 Road Map, which E-PESO helped develop. That road map presents the strategies for its 22-item agenda. Outcomes and measures of success include increased contribution of e commerce to the economy, the availability of digitally skilled workers employed, the number of e-commerce enterprises increased, and empowerment of online consumers69. BSP has strong organizational capacity. BSP has leaders who constantly championed the push to modernize the payments industry and is equipped with knowledgeable staff. In February 2021, BSP created a new department that will manage the interplay of physical currency and digital money in line with efforts to shift to a cash-lite economy70. The newly formed Payments and Currency Management Sector (PCMS) is mainly responsible for maintaining the safety and integrity of the Philippine currency and ensuring a well-functioning payments and cash ecosystem that facilitates economic activity and supports long-term economic growth71. Among other things, the PCMS will handle the licensing and supervision of payment system operations and the formulation of strategies and policies for currency and payments system, including the digital payments transformation. Also, there is a widespread recognition of the importance of BSP’s work and its emphasis on digitalization of payments. In August 2021, BSP’s NRPS core team was given the Presidential Lingkod Bayan Award for its pioneering work in transforming the country’s retail payment ecosystem into a safe, efficient, competitive, and inclusive environment. The award is a program of the Civil Service Commission and is given to an individual or group for exceptional contributions resulting from an idea or performance that had nationwide impact on public interest, security, and patrimony72. Expanding initiatives on the further adoption of digital payments. BSP, in partnership with other government agencies and the private sector, has many ongoing initiatives to further increase the use of digital payments. These initiatives include development of payment streams such as (1) QR Ph P2M, which will facilitate digital payments to small vendors, such as sari-sari stores and tricycle drivers; (2) an interoperable bill payment facility that aims to harmonize the fragmented bill payment mechanism; (3) a request to pay facility, wherein payees can initiate collection by sending a request to pay to the payor; and (4) direct debit, which facilitates management of recurring payments by authorizing payees to take funds from the payor’s account73. BSP is also collaborating with other government agencies on initiatives such as the Automated Fare Collection System (AFCS) of the Department of Transportation (DOTr). The AFCS initiative aims to promote the use of digital payments in the transport sector. The initiative will establish an interoperable 69 Philippine Department of Trade and Industry, E-Commerce Philippine 2022 Roadmap, accessed January 26, 2022, https://ecommerce.dti.gov.ph/madali/ 70 Lee C. Chipongian, “Outsider appointed as 4th BSP deputy governor,” Manila Bulletin, February 23, 2021, https://mb.com.ph/2021/02/23/outsider-appointed-as-4th-bsp-deputy-governor/ 71 Bangko Sentral ng Pilipinas, BSP Organization Primer, October 31, 2021, https://www.bsp.gov.ph/About the Bank/BSP Org Primer.pdf 72 Lucas, D. (2021, August 13). BSP Team Gets Awards for PH e-payment system. Inquirer.net 73 BSP. 2021. Forging Pathways TO A CASH-LITE SOCIETY Status of Digital Payments in the Philippines USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 30 AFCS that allows the use of any transport card (e.g., Beep card) as well as contactless Europay, Mastercard, and Visa debit cards in any mode of public transportation equipped with an AFCS card reader74. The DOTr has made steps toward implementation of a nationwide interoperable AFCS. The project is expected to benefit both passengers and transport operators through seamless, interoperable, and contactless fare collection. Activities under E-PESO will also continue, such as Issuance of Electronic Official Receipts and e Invoicing in partnership with the BIR and Social Benefit Transfers in partnership with the DSWD. On top of these activities, BSP has reached out to the public to encourage use of digital payments. For instance, BSP has been actively promoting the use of digital money for holiday gifts75. The exit strategy for E-PESO involved improving agencies’ capacity for sustainability. During implementation, the partner organizations were involved from the onset to improve capacity and sustainability after the project ends. For instance, E-PESO helped build the capacities of DTI and NATCCO mentors by equipping them with knowledge and tools to sustain the training program even after E PESO’s completion. An operational manual on delivering IDMTP was developed, and the DTI institutionalized the training and expanded the coverage to include MSMEs. The DTI will continue to implement the IDMTP as one activity under the REBUILD PH campaign. Lack of consumer awareness, trust, and confidence in digital payments are major reasons reducing adoption of e-payments. Based on BSP’s 2019 Financial Inclusion Survey76, although 69 percent of Filipino adults have mobile phones, only 8 percent use their mobile phones for financial transactions. The primary reasons cited for not using mobile phones for financial transaction are (1) lack of awareness (52 percent), (2) lack of trust (32 percent), (3) weak or lacking mobile signal (16 percent), and (4) a preference for branch and ATM transactions (14 percent). The same pattern was observed for the reasons cited for not using the Internet for financial transactions: (1) lack of awareness (48 percent), (2) lack of trust (39 percent), (3) slow or lacking Internet access (22 percent), and (4) a preference for branch and ATM transactions (14 percent). In view of the COVID 19 pandemic, these percentages are expected to improve in the next survey period77. The BSP road map emphasized the 2019 Financial Inclusion Survey findings on the need for inclusive economic growth as well as reliable and affordable internet access to address the digital divide. Based on the 2019 Financial Inclusion Survey, lack of money is the top reason for not having a bank account, as reported by almost half (45 percent) of respondents without bank 74 Bangko Sentral ng Pilipinas, 2020 Financial Inclusion Initiatives, accessed January 27, 2022, https://www.bsp.gov.ph/Media_And_Research/Year-end Reports on BSP Financial Inclusion Initiatives/2020/microfinance_2020.pdf 75 Daxim L. Lucas, “BSP Team Gets Award for PH e-Payments System,” August 13, 2021, Philippine Daily Inquirer, https://business.inquirer.net/328905/bsp-team-gets-award-for-ph-e-payments-system 76 The BSP Financial Inclusion Survey is a nationally representative survey dedicated to collecting financial inclusion data from users and nonusers of financial products and services. The survey started in 2015 and is conducted every two years. 77 Raymond Estioko, Bridget Rose Mesina-Romero, Maria Christina Masangkay, Maureen Franco, Marco Luis de Larrazabal, Paulene Niña Bueno, Patricia Josette Lingat, and John Jerry Jaspio, Forging Pathways to a Cash-Lite Society: Status of Digital Payments in the Philippines, 2021 Edition, 2021, https://www.bsp.gov.ph/PaymentAndSettlement/BSP-Forging_pathways_to_a_cash-lite_society￾Status_of_Digital_Payments_in_the_Philippines_(2021_edition).pdf 31 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV accounts. Further, gaps in smartphone ownership and Internet access were observed in terms of locality, geography, income, and age. In terms of income, only 4 in 10 adults belonging to socioeconomic class E own a smartphone and are using the Internet. The number is twice higher for those in class ABC (8 in 10 adults). This finding suggests that inclusive economic growth is crucial to achieving a digital payment ecosystem that works toward financial inclusion78. Digital connectivity concerns remain a major barrier to making advances in digital finance. These concerns include making Internet connections faster, more affordable, and widely available, which will translate to wider access to digital financial services. To boost financial inclusion in off-grid areas, BSP is exploring offline digital payment solutions to enable users to participate without the need for an Internet connection. The evaluation’s key informants expressed the need for support in the areas of digitalization for small players, stock taking of stakeholder concerns, and in-depth studies toward identifying solutions to infrastructure barriers to improving digital connectivity as a way to ensure that e-payments continue to grow. Other specific areas include (1) technical assistance to the DBM on the government’s integrated financial management information system; (2) assistance in the development of policy to mainstream digital payments in all DSWD’s programs and services; (3) scaling up the DTI’s existing awareness campaigns; and (4) continued technical support to LGUs because some cities and municipalities lack the right information technology people or the technical know-how to implement digitalization. 78 Philippine Information Agency, “BSP Eyes Offline Digital Payments to Support Financial Inclusion, November 30, 2021, https://pia.gov.ph/press-releases/2021/11/30/bsp-eyes-offline-digital-payments-to-support-financial-inclusion USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 32 CONCLUSIONS This evaluation resulted in the following conclusions based on the findings in the previous section. RELEVANCE E-PESO proved to be highly relevant given the strong alignment with country priorities. E￾PESO remained aligned with national priorities and USAID strategies, as indicated in PDP and CDCS documents. This continued relevance is expected given the pressing development concern of financial inclusion and the emergence of technological innovations. Further, E-PESO supported international commitments, particularly of the SDGs. The UN has recognized the transformative power of digital financial inclusion79 as having the potential to support the achievement of 13 of the 17 SDGs. The E-PESO Activity transferred knowledge to major government counterparts in support of the aforementioned priorities in financial inclusion and governance. This helped advance government adoption of e-payments as a means of financial inclusion under a sound governance structure. Before the development of the NRPS, there was an observed lack of interoperability among financial institution that hindered payment streams among businesses, individuals, and government, causing inefficiencies, preventing sustained use of e-payment, and hindering financial inclusion. The E￾PESO team shared the global perspective on digital payments and provided BSP with the technical expertise to support the development of the NRPS framework. In the case of the DSWD, whose mandate and expertise do not relate to financial endeavors, assistance from E-PESO paved way for the staff and program beneficiaries to improve financial literacy and apply this knowledge to achieving positive behavioral changes and financial independence. The initiatives under E-PESO have been timely in light of the COVID-19 pandemic. With support from E PESO, the government was able to lay the necessary foundation for digital payments before the COVID-19 outbreak. This allowed the digital payments to grow exponentially when the country shutdown due to COVID. Although progress was already notable before the pandemic, the pandemic accelerated the shift to digital payments. It made digitalization a tool not only for efficiency but also for safety, useful for all members of society, including lower-income Filipinos. E-PESO successfully applied adaptive management to refocus its efforts when faced with a reduction in project obligations and again when covid struck. E-PESO scaled back its work with local governments to focus on the payments infrastructure when faced with lower funding levels. It also pivoted to quickly focus on COVID relief measures such as the ReliefAgad app and the campaign for cyber hygiene among the masses of new digital payment users. EFFECTIVENESS Overall, E-PESO has been effective in facilitating adoption of digital payment. The share of digital payments reached 20.1 percent in 2020, suggesting that the county is on track to meet the national target of 50 percent by 2023. Comparing 2013 and 2020 values, growth in digital payment for all payer types (individuals, businesses, and government) has been significant. High-frequency, low-value 79 The Consultative Group to Assist the Poor or CGAP defined digital financial inclusion as digital access to and use of formal financial services by excluded and underserved populations. 33 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV transactions made by individuals increased from 0.3 percent in 2013 to 23.4 percent in 2020, which was a major contributor considering that payments by individuals make up 78.1 percent of the total payments volume. Adoption was hastened by the COVID-19 pandemic, although adoption was already increasing before lockdowns. With the imposition of lockdowns, mobility was restricted, forcing people and institutions resort to digital transactions. This shift was illustrated by data on PESONet and Instapay. Pre-COVID data shows an increasing trend in the use of digital payment and that trend is likely to have continued. Nonetheless, the exponential growth after March 2020 is due to the COVID lockdown. The most important contribution of E-PESO is its support for formulation of the NRPS framework for a safe, reliable, efficient, and interoperable retail payments system. Other, related accomplishments include policy formulation support to BSP in the establishment of the Payments System Management Body and in establishing ACHs. Ultimately, these accomplishments facilitated the wide adoption of e-payment services under the NRPS. Several factors contributed to the success of the project: the presence of institutional champions, an adaptive approach to project management, effective engagement of the private sector, effective transfer of knowledge, and multi-stakeholder engagement. SUSTAINABILITY The gains brought about by the E-PESO Activity are likely to be sustained, as evidenced by strong country ownership. Leading this sense of ownership is BSP, which demonstrated commitment to the digitalization agenda and has strong institutional capacity. The digitalization agenda is embedded in government institutions’ road maps, such as BSP’s Digital Payments Transformation Road Map 2020– 202380, the BIR DX Road Map, and the DTI e-Commerce Road Map. The digitalization agenda is also backed by policies and legislation, some pending reenactment. Some of E-PESO’s initiatives with major government counterparts have more mixed results and may be less likely to be sustainable. Regarding the planned integration of financial inclusion in the government’s conditional cash transfer program, the DSWD is committed to pursuing the conversion of limited-purpose cash cards to full-service transaction accounts but has not yet done so. The DTI will continue to implement the IDMTP as one of the activities under the REBUILD PH campaign, which aimed to jumpstart and reinvigorate the Philippine economy but with elections upcoming in May 2022, government priorities may change. In contrast, assistance to DBM on e-learning, which was originally intended to help the BTMS facilitate digital disbursements, ended up being used for other modules because the BTMS was temporarily suspended. 80 Bangko Sentral ng Pilipinas, BSP Digital Payments Transformation Roadmap 2020-2023, accessed January 26, 2022, https://www.bsp.gov.ph/Media_And_Research/Primers%20Faqs/Digital%20Payments%20Transformation%20Roadm ap%20Report.pdf USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 34 The digitalization agenda within the government deepened, however, covering development of payment streams, new initiatives with other government agencies, and active information campaigns. This deepening is a sign of increased government committed and increases the likelihood that E-PESO’s contributions to the digital payments system will be sustained and even expanded. New initiatives include development of payment streams (i.e., QR Ph P2M, interoperable bills payment facility, request-to-pay facility, and direct debit), new initiatives with other government agencies (i.e., AFCS with DOTr, Issuance of Electronic Official Receipts and e-Invoicing with the BIR, MSME e commerce with the DTI, and Social Benefit Transfers with the DSWD), and active information campaigns. New adopters will likely continue to use digital payments. With the easing of COVID-19 restrictions, it may be reasonable to expect some reversion to past practices (i.e., preference for cash), but the in-process digital shift has clearly received a permanent forward jolt. Based on the Google￾commissioned Kantar SEA e-Conomy Research 2021, there have been about 12 million new digital consumers in the Philippines since the start of the COVID 19 pandemic. Of these, 63 percent are from non-metro areas and 99 percent expressed an intention to continue digital consumption. For those who used the services before the pandemic, average consumption increased by 4.3 times since the pandemic began81. Improving digital connectivity is key to digital financial inclusion. The poor state of infrastructure, particularly Internet connectivity, continues to be a major barrier to digital finance. Although efforts to improve connectivity are underway, innovative solutions, including those in the off￾grid areas, are critical. As of writing this report, BSP is exploring offline digital payment solutions to enable users to participate without the need for an Internet connection. 81 Google, Temasek, and Bain. e-Conomy SEA 2021 Roaring 20s: the SEA Digital Decade. 2021. https://www.bain.com/globalassets/noindex/2021/e_conomy_sea_2021_report.pdf 35 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV LESSONS Regarding recommendations, the evaluation team completed this study after E-PESO had closed and on a relatively short timeline. Because E-PESO leadership and staff had moved on to other pursuits and were not able to request that their partners and stakeholders meet with the evaluation team, and many stakeholders were unable or unwilling to dedicate the time for remote key informant interviews or focus group discussions, the evaluation team was not able to triangulate all of the findings. Instead, the evaluation team relied on project documents, government and industry statistics, and outside research on the digital economy. While the evaluation team is confident in its findings and conclusions, based on the available evidence, the team determined that the evidence is not strong enough to make recommendations. Instead, the evaluation report gleans lessons learned from E-PESO’s implementation that may inform future project design and implementation. Government partners’ commitment to implementing reforms is the foremost factor in project success. The development partner’s role is limited to providing expertise, conducting in-depth studies, and facilitating the process. Ultimately, the government of the host country decides whether to adopt the recommendations and implement the reforms. With the E PESO Activity, BSP demonstrated leadership (engaged the payment industry and other government agencies) and commitment to making the necessary reforms to modernize the country’s payment system. Continuity in the development partner’s engagement facilitates constant contribution in the reform process and helps build partner commitment over time. The implementation of E￾PESO benefitted from previous USAID-supported projects. Microenterprise Access to Banking Services (1997–2012), which focused on increasing microenterprise access to financial services, pioneered the use of mobile banking services using e payments. SIMM (2012–2015) followed on after the E-PESO Activity, which expanded the use of mobile money payments. Under SIMM, the lack of interoperability among financial institutions was a structural barrier hindering mobile money from reaching scale. From that experience, the NRPS was conceptualized, a crucial activity that E PESO continued (see Figure 7). This continuity in support maximizes the momentum gained from previous projects. In-depth studies, particularly diagnostic studies of structural barriers, that are produced under one project may not be implemented under the same project because of constraints in implementation (e.g., time and cost), which presents opportunities for support of succeeding projects. Figure 7. USAID Activities on Digital Payments and Financial Inclusion Microenterprise Access to Banking Services (1997–2012) •Pioneered the use of mobile banking services using e￾payments Scaling Innovations for Mobile Money (2012–2014) •Expanded the use of mobile money payments •Conceptualization of an interoperable retail payment system E-PESO (2015–2021) •Supported the development of a safe, reliable, efficient, and interoperable retail payment system •Supported the adoption of e￾payments USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 36 The private sector can produce valuable partners to help solve development problems. As E-PESO demonstrated, development projects can explore partnerships with the private sector and produce larger dividends, particularly in areas where the private sector has greater expertise. Examples from E-PESO are the payment solutions to facilitate digital payment of taxes to the BIR that the private sector helped to develop with E-PESO and the RELIEFAgad app that helped the government respond to the COVID pandemic. This approach works, even for a policy and regulatory-related project like E￾PESO, because the private sector is more experienced with innovations, particularly on ICT-related initiatives. Development projects can also leverage private sector resources. For instance, through its private sector partnerships, E-PESO delivered the ReliefAgad application without additional costs for systems development (see the discussion in the section, “Effectiveness”). Finally, engaging the private sector effectively involved identifying alignments between the sector’s objectives and project objectives. E￾PESO partnered with the DTI and the private sector (Lazada, Shopee, Facebook) to train women entrepreneurs to become online sellers. The success of women entrepreneurs as online sellers also means success for the private sector, which provides the e-commerce platforms. Engaging multiple stakeholders facilitates quicker resolution and improves project implementation. In the experience of E-PESO, by engaging all concerned actors—BSP as regulator, the supply-side players or financial service providers, and the demand-side partners—regulatory questions are answered, and technical implementation issues are quickly ironed out because all actors are involved at the onset. Again, engaging the private sector has huge potential because it can produce effective partnerships for solving development problems. Adaptive project management increases relevance and effectiveness. When the COVID-19 pandemic appeared, E-PESO was quick to adopt online meetings and virtual events to resume the implementation of activities, avoiding any further delays82. Also, E-PESO strategically supported the government on COVID-19 response activities, such as disbursement of government relief and digital awareness campaigns. E-PESO was responsive to the needs of the DSWD in carrying out quick and convenient beneficiary registration and relief disbursement in the context of an emergency situation, thereby increasing relevance and effectiveness. The project also implemented public awareness campaigns to strengthen preference for digital payments during the pandemic. The project adapted well to the situation and took advantage of the opportunities for broad-based digital payment adoption that the pandemic brought about. Development solutions require addressing both binding constraints and deployment￾related barriers and placing an emphasis on the sequencing of assistance. In the case of E￾PESO, the project first helped address the structural barrier, which was the lack of interoperability in the country’s payment system. This work was followed by support for adoption and information campaigns. On the side of users, building trust and confidence in digital payments was and is important for increasing and maintaining adoption. 82 Based on the E PESO Final Report, E-PESO activities were able to resume two months after the ECQ declaration. 37 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV In the case of the development of the ReliefAgad application, understanding the target user also was critical to ensuring the application’s use. Because the app’s intended users belong to the lower-income segment of the population, E-PESO took into account the intended user profiles to ensure that the app would be utilized. For example, those who do not own smartphones can still register using someone else’s phone. For those without bank accounts, the DSWD can push the data to participating financial institutions to facilitate creating new accounts. E-PESO also made video tutorials and customer support available to users, which may have increased the apps acceptance and use. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 38 ANNEXES ANNEX A. STATEMENT OF WORK 39 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 40 41 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 42 43 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 44 45 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 46 47 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 48 49 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 50 51 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 52 53 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 54 55 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 56 ANNEX B: EVALUATION DESIGN MATRIX TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS RELEVANCE EQ1: In what ways does E-PESO support the country's national development goals and the USAID's country cooperation strategy objectives? 1.1 In what ways has E-PESO contributed to the priorities of the Philippine Development Plan during appraisal and this evaluation? 1.1.1 In what ways has E-PESO contributed to the priorities of the Philippine Development Plan during the appraisal? - Philippine Development Plan (previous) - government roadmaps (previous) - Desk review - Content analysis 1.1.2 In what ways has E-PESO contributed to the priorities of the current Philippine Development Plan? - Philippine Development Plan (current) - government roadmaps (current) 1.2 In what ways has E-PESO contributed to the strategies indicated in USAID's CDCS during appraisal and during this evaluation? 1.2.1 In what ways has E-PESO contributed to USAID country strategy for the Philippines during the appraisal? - USAID PH country planning documents (previous) - Desk review - Content analysis 1.2.2 In what ways has E-PESO contributed to the current USAID country strategy for the Philippines? - USAID PH country planning documents (current) 1.3 In what ways has E-PESO contributed to the needs of participating LGUs? - local development plans - KII reports - Desk review - KII -Content Analysis 57 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS 1.4 How did the COVID-19 pandemic affect the shift to the digital payment agenda? 1.4.1 1.4.1 How did the COVID-19 pandemic bring about or highlight concerns related to the shift to digital payment? - project documents - secondary sources - KII reports EFFECTIVENESS EQ2: Did E-PESO achieve the four sub-purposes of developing a lasting and inclusive economic infrastructure? What are the possible reasons for the successes and the failures? 2.1 In what ways did the implementation of E-PESO support the rapid adoption of e￾payments in the financial system (sub-purpose 1)? 2.1.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.1.2 What are the factors contributing to the challenges? - project documents - secondary sources - KII reports 2.2 In what ways did the implementation of E-PESO support the expansion of infrastructure for e-payments (sub-purpose 2)? 2.2.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.2.2 What are the factors contributing to the challenges? - project documents - secondary sources - KII reports 2.3 In what ways did the implementation of E-PESO support the improvement of the enabling environment for e￾payments (sub-purpose 3)? 2.3.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.3.2 What are the factors contributing to the challenges? - project documents - secondary sources - KII reports USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 58 TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS 2.4 In what ways did the implementation of E-PESO help address gaps in broader e￾payment ecosystems (sub￾purpose 4)? 2.4.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.4.2 What are the factors contributing to the challenges? - project documents - secondary sources - KII reports 2.6 What was the effect of the COVID-19 pandemic on the effectiveness of E-PESO? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics SUSTAINABILITY EQ3: What evidence supports the likelihood that the benefits of the E-PESO will extend past the activity’s period of performance, and what considerations should future similar activities take into account? 3.1 What are the pieces of evidence supporting the likelihood that the benefits of E￾PESO will extend after completion? 3.1.1 Are policies in place to support the shift to digital payment agenda? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis 3.1.2 Are institutional capacities adequate to continue the shift to digital payment agenda? - project documents - secondary sources - KII reports 3.1.3 What were the exit strategies developed for E-PESO? - project documents - KII reports 3.1.4 Which exit strategies worked and why? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis 59 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS 3.1.5 What are the new government targets? - secondary sources - KII reports 3.1.6 What is the likelihood that the new targets will be met? - secondary sources - KII reports 3.2 What considerations should future similar activities take into account? 3.2.1 What other works are needed to support the shift to digital payment agenda further? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 60 ANNEX C: LIST OF DOCUMENTS CONSULTED PROJECT DOCUMENTS 1. E-PESO Fact Sheet 2. E-PESO 2nd Annual Report (October 2015 – September 2016) 3. E-PESO 3rd Annual Report (October 2016 – September 2017) 4. E-PESO 4th Annual Report (October 2017 – September 2018) 5. E-PESO 5th Annual Report (October 2018 – September 2019) 6. E-PESO 6th Annual Report (October 2019 – September 2020) 7. E-PESO Component 1 STTC Activity Report (October 2015) 8. E-PESO Contractor’s Completion Report on the Implementation of the National Survey, E-PESO research notes, and partnership building (October 2015 – June 2016) 9. E-PESO End of Contractor Report on Shared Cash Agent Network (November 2019 – April 2020) 10. E-PESO Final Report (February 2021) 11. E-PESO Monitoring and Evaluation Plan (September 8, 2020) 12. E-PESO Short-term Consultant Report on the Development of E-payments Module (February 2020 – January 2021) 13. USAID Country Development Cooperation Strategy 2013-2019 14. USAID Country Development Cooperation Strategy 2019-2024 OTHER DOCUMENTS 1. Better than Cash Alliance (2015) Report on Development Results Focused Research Program Country Diagnostic: Philippines 2. Better than Cash Alliance (2019) Report on The State of Digital Payments in the Philippines 3. Better than Cash Alliance (2021) Report on The State of Digital Payments in the Philippines 2021 Edition 4. BSP (2019) Report on Financial Inclusion Survey 5. BSP (2020) Digital Payments Transformation Roadmap 2020-2023 6. BSP (2020) FAQs National Retail Payment System 7. BSP (2020) Report on 2020 Financial Inclusion Initiatives 8. BSP (2021) Report on Forging Pathways TO A CASH-LITE SOCIETY Status of Digital Payments in the Philippines 2021 Edition 9. Google-commissioned Kantar SEA e-Conomy Research 2021 10. ITU (2020) Report on Measuring Digital Development: ICT price trends 2020 11. McKinsey and Company (2020) Report on The Future of Payments in Asia 12. Mission Critical: Enabling Digital Payments for Development – A USAID Opportunity Brief 13. NEDA (2011) Philippine Development Plan 2011-2016 14. NEDA (2016) Philippine Development Plan 2017-2022 15. Philippine Institute for Development Studies (2021) Bridging the Digital Infrastructure Gap: Policy Options for Connecting Filipinos 16. UNSGSA (2018) Report on Igniting SDG Progress through Digital Financial Inclusion 17. USAID/Philippines Scaling Innovations in Mobile Money (SIMM) Project Final Report 61 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV NEWS ARTICLES AND VIDEOS 1. Bangko Sentral ng Pilipinas (2021) Basic Deposit Accounts up 51% in Q1 2. Bangko Sentral ng Pilipinas (2021) BSP Eyes Offline Digital Payments to Support Financial Inclusion 3. Bangko Sentral ng Pilipinas (2021) BSP Gov. Diokno Says BSP to Hit Digitalization Targets in 2022 4. Bank for International Settlements (2021) Benjamin E. Diokno: QR-PH-Event-Payment-To￾Merchant (P2M) Pilot Launch (Speech) 5. Business World Online (2021) Central Bank Requires Payment Systems to Comply with International Standards 6. BusinessWorldTV (2020) Business World Insights: Creating Digital Ecosystems to Jumpstart Local Economies (Video) 7. BusinessWorldTV (2020) Business World Insights: Enabling LGUs in the New Normal through Digital Payments Acceptance (Video) 8. Department of Trade and Industry (2021) Empowering Women in Digital Through ‘E-Taas ang Pinay MSMEs’ Campaign! 9. Manila Bulletin (2021) Onboarding of EGov Pay 90% done-BSP 10. Manila Bulletin (2021) Outsider appointed as 4th BSP Deputy Governor 11. Philippine Daily Inquirer (2021) BSP Tip to Gift Givers: Use Digital Wallets 12. Philippine Daily Inquirer (2021) BSP Team Gets Award for PH E-Payment System 13. Philippine Daily Inquirer (2021) BSP wants all state agencies onboard EGov Pay this year 14. Philippine Daily Inquirer (2021) The Great Divide 15. Philippine Information Agency (2021) Full Rollout of QR Ph P2M To Accelerate Shift to Cash-Lite Economy 16. The Manila Times (2021) 42M Complete First Step of PhilSys Registration USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 62 ANNEX A: KEY INFORMANTS NAME POSITION/ORGANIZATION CATEGORY Mr. Raymond Estioko Senior Director Payment System Oversight Department Bangko Sentral ng Pilipinas Major Counterpart Ms. Bridget Rose Mesina Acting Deputy Director Payment System Oversight Department Bangko Sentral ng Pilipinas Major Counterpart Ms. Carmelita Araneta General Manager Philippine Payment Management Inc. Major Counterpart Ms. Sheryl Aromin BTMS Project Lead Department of Budget and Management Major Counterpart Mr. Kenneth Mallari Project Development Officer IV E-Learning System Department of Budget and Management Major Counterpart Ms. Gemma Gabuya National Program Manager and Director Pantawid Pamilyang Pilipino Program Department of Social Welfare and Development Major Counterpart Mr. Arvin Longcop Project Development Officer III Pantawid Pamilyang Pilipino Program Department of Social Welfare and Development Major Counterpart Ms. Mary Jean T. Pacheco Assistant Secretary Digital Philippines and Ecommerce Lead Department of Trade and Industry Major Counterpart Mr. John Geesnell Yap II City Mayor Tagbilaran City Participating LGU Ms. Marie Angelique Cruz-Go City Human Resources Head Zamboanga City Participating LGU Mr. Mamerto Tangonan Former Chief of Party Chemonics International Implementing Partner Ms. Melissa Cook Former Deputy Chief of Party (2015-2017) Chemonics International Implementing Partner Ms. Bernadette Ramos Senior Enabling Environment Advisor Chemonics International Implementing Partner 63 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV ANNEX B: E-PESO INDICATORS AND ACCOMPLISHMENTS INDICATOR ACCOMPLISHMENT DESIRED IMPACT (DI) Indicator DI 1&2: Increased economic opportunity a. Number of e-payment users Achieved. Based on BSP Financial Inclusion Dashboard, e-payment users reached 81.4 million (as of end of 2019) (Target: 13.5 million) b. Percent of population 15 years old and above who are e- payment users Achieved. Based on World Bank Findex 2018 (data is for 2017), share of adult population who are e-payment users reached 25.1% (Target: 20%). Indicator DI 3: Transparency and efficiency of the retail payment system improved. This indicator will be tracked under ‘Outcome Indicator 3.1 - Financial regulation refined to manage growth of e- payments. Indicator DI 4: More predictable and reliable financial tools for the poor - Number of financial products, services or applications that are designed/ enhanced to meet the needs of low￾income clients, Achieved. Seven financial products, tools, and services were designed to meet the needs of low-income clients:  DSWD financial literacy tool and distribution of ATM/debit cards  ReliefAgad self-registration web application for SAP beneficiaries  Digital disbursements of SAP subsidies to beneficiaries  Digital wallet GCASH using InstaPay – a service made possible with USAID/E-PESO assistance. InstaPay allows lower-income clients to make fund transfers and payments  Digital wallet PayMaya using InstaPay – a service made possible with USAID/E-PESO assistance. InstaPay allows lower-income clients to make fund transfers and payments  Digital wallet StarPay using InstaPay – a service made possible with USAID/E-PESO assistance. InstaPay allows lower-income clients to make fund transfers and payments  InstaPay and PESONet services offered by rural banks, allowing clients in rural communities to make fund transfers and payments (Target: 7 financial products) DESIRED PURPOSE (DP) Indicator DP 1: E- payments accounting for at least 10% of all retail payment transactions - Percent of e-payments accounting for retail payment transactions Achieved. The State of Digital Payments in the Philippines (Dec 2019) report estimates the share of digital payments to be 10% by volume and 20% by value in 2018. (Target: 10%) Indicator DP 2: Growth in the number of active e￾payment users to reach scale - Number of active e- payment users Achieved. The number of active e-payment users reached 34.7 million in 2020 (Target: 12 million) Note: The E-PESO Final Report assessed this indicator as not achieved based on the available data at that time which is as of 2019. This evaluation updated the accomplishment for the indicator with 2020 data. SUB-PURPOSE INDICATORS USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 64 INDICATOR ACCOMPLISHMENT Indicator 1.1: Adoption of new e-payment services as collection/ disbursement option in five (5) national GPH agencies Achieved. E-PESO assisted the following national government agencies to enable digital collection and disbursements:  E-PESO assisted Bureau of Internal Revenue in expanding e-payment collection options (online via DBP’s Internet Payment Gateway), LandBank’s Link.Biz portal, Unionbank online portal and mobile via PayMaya and GCASH).  E-PESO assisted the National Meat Inspection Services (NMIS) to make online payments for permits available.  E-PESO worked with the DTI to integrate the Business Name Registration System with online and mobile payment services.  With USAID/E-PESO assistance, the SSS implemented mandatory online transactions and checkless disbursements, providing members, employers, pensioners, and beneficiaries/claimants with faster, safer, more convenient, and economical means to register, submit their loan and benefit applications, and receive their loan proceeds and cash benefits.  E-PESO worked with DSWD to disburse the second tranche of the Social Amelioration Program benefits via digital wallets and bank accounts, as well as develop and rollout the web-based registration app, ReliefAgad, facilitating beneficiary registration. (Target: 5 national GPH agencies) Indicator 1.2: Adoption of m-money and e-payments in all cities of PFG CDI and other cities/municipalities - Number of CDIs (and other cities/ municipalities) that introduced or enhanced m- money and e-payment options Achieved. PESO provided research, advisory services, partnerships facilitation, and project management assistance to eleven LGUs (i.e., Quezon, Valenzuela, Puerto Princesa, Legazpi, Tagbilaran, Zamboanga, Cagayan de Oro, Ligao, General Santos, Ubay, and Nabunturan) to support the expansion of their e-payment ecosystems. Consistent with the ecosystem approach, E- PESO also engaged with the private sector and local financial stakeholders in these areas, including electronic money issuers, e-payment service providers, industry associations, third party aggregators, banks, and other financial institutions to encourage collections and disbursements via electronic channels. (Target: 10 LGUs) Indicator 1.3: New e- payment implementation and adoption by 300 (small, medium, and large) businesses - Number of businesses introducing or enhancing e- payment options because of USAID/E-PESO support Achieved. The number of businesses reached 1483. E-PESO exceeded the target by working with PPMI to encourage PPMI/PESONet ACH members to shift corporate clients to e- payments. The number of businesses is the aggregate total of enterprise clients of some PESONet ACH Members utilizing PESONet. (Target: 300) Indicator 1.4: Over 16,000 people trained (via consumer education) on the uses of e￾payments and m-money services for improved household financial management - Number of people trained (via consumer education) on the uses of e￾payments Not Achieved. The E-PESO final report declared 75% accomplishment (i.e., 11,962 actual vs. the 16,000 target) This excludes the training for the DSWD’s financial literacy program supporting the disbursement of conditional cash transfer benefits to transactional accounts which will commence in February 2021. (Target: 16,000) Indicator 2.1: Growth of front-end e-payment Achieved. The number of institutions expanding their front-end infrastructures reached 79. 65 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV INDICATOR ACCOMPLISHMENT infrastructure83 expanded - Number of institutions supported by E￾PESO to improve and/or expand their front-end infrastructure (Target: 30) Indicator 2.2: Back-end e-payment infrastructure84 strengthened - Number of institutions supported by E￾PESO to improve and/or expand their back-end infrastructure Achieved. A total of 128 unique institutions are connected to PESONet’s and/or InstaPay’s CSO and are receiving electronic funds transfer credit instructions through the ACHs. (Target: 30). Indicator 2.3: E-payment infrastructure gaps identified - Number of gap analysis reports85 at industry or ecosystem level Achieved. Six reports were produced. Reports include: (a) E-payments Landscape; (b) Philippine Individual Payments Baseline Survey; (c) Philippine Agent Network Study; (d) Gap analysis Report on the Assessment of Existing BSP Digital Security Policy Areas Vis-à-vis Recommended Leading Standards on Digital Security Policies; (e) Philippine Institutional E-Payments Baseline Survey; and (f) Agent Cash-in/Cash-out Network Concept Note. (Target: 5) Indicator 3.1: Financial regulation refined to manage growth of e-payments a) No. of circulars, regulations, and/or local ordinances refined or clarified to support e-payment growth Achieved. There were 24 circulars, regulations, and/or local ordinances refined or clarified to support e-payment growth. (Target:13) b) No. of public-private dialogues to support strengthening e-payment environment Achieved. 37 dialogues/roundtables/consultation meetings with various stakeholders including regulators, businesses and/or financial institutions. (Target: 30) Indicator 3.2: Increased competition among m- money and e-payment platforms - Number of policies removed or added to reduce barriers and encourage competition Achieved. Six policies were removed or added to reduce barriers and encourage competition in e- payments. (Target: 6). 83 Front-end infrastructure is any user- interface or device needed by individual users to conduct e-payment transactions and any computer system, software application, and/or device used by an institution or individual user to conduct e-payment transactions. 84 Back-end infrastructure is any system at the back-office operation of an institution required to allow and process e- payment transactions coming from the front-end infrastructure and any system from financial institutions connected to switch operators appointed by the automated clearing house participants used to process and settle e-payment transactions. 85 Gap analysis reports are studies done to assess demand, supply, or infrastructure gaps within an entire industry or e-Payments ecosystem at a regional or national scale. This does not apply to gap analysis reports done at the firm or institutional level during a partner engagement. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 66 INDICATOR ACCOMPLISHMENT Indicator 3.3: Interoperability in the national payment system achieved - Batch electronic fund transfer (EFT) Real time EFT (InstaPay) Achieved. With the issuance of BSP Circular No. 980 stating: “(1) BSFIs shall make electronic payments available in all its delivery channels when applicable; (2) BSFIs shall enable its clients to move/receive funds to/from account with other BSFIs, or, at a minimum, receive funds. Movement of funds between BSFIs shall be carried out through participation in an ACH” – interoperability of the various payment streams is assured. The ACH clearing rules detail the terms of the interoperability. Indicator 3.4: Increased consumer awareness and trust in e-payments a) % of population 15 years old and over aware of e- payments Achieved. 81% (Target: 70.3%) b) % of population 15 years old and over that trust the e-payment system Achieved. 75% (Target: 64.5%) Indicator 3.5: Security measures in e-payments strengthened - No. of guidelines developed and forums held that promote awareness on digital security best practices or consumer protection Achieved. A total of 10 activities (i.e., guidelines developed, and forums held) were conducted to promote awareness on digital security best practices or consumer protection. (Target: 6). Indicator 3.6: Global knowledge-sharing on e-payments promoted a) No. of articles promoting e-payments Achieved. There were 287 published articles promoting e-payments. (Target: 60). b) No. of global knowledge-sharing events that highlight the Philippines e￾payment environment/players Achieved. The E-PESO held 21 global knowledge-sharing events that highlight the Philippines e-payment environment/players. (Target: 6). SOURCE: E-PESO FINAL REPORT 67 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV ANNEX F: DIGITAL FINANCIAL INCLUSION OPPORTUNITIES FOR SDGS SDG OPPORTUNITIES 1: No Poverty Digital financial services provide low-income households with access to affordable and convenient tools that can help increase their economic opportunities. For extremely poor families, combining digital financial services with livelihood promotion, safety nets, and mentoring boosts their long￾term standard of living 2: Zero Hunger Digital financial services can help farmers access the funds they need to produce higher yields with lower risks, increasing overall agricultural productivity. Digital financial services deliver faster, safer, more reliable social transfers for the undernourished. 3: Good Health and Well-being Digital finance allows households to cope better with health emergencies without being forced into poverty. Healthcare providers can extend their services into low-density rural areas through digital payments and financing. 4: Quality Education Digital finance can make education expenses more manageable for lower-income households and help schools and national education systems improve their financial management. This can free up resources for teachers, materials, and technologies that improve education outcomes. 5: Gender Equality Digital financial services empower women to earn more and build assets. This greater financial power fuels gender equality and economic growth. 6: Clean Water and Sanitation Digital finance enables water and sanitation providers to serve low-income households, while also supporting the sustainable expansion of utility networks. 7: Affordable and Clean Energy Digital payments enable solar companies in Africa and Asia to offer pay-as-you-go energy to millions of low-income families – a clear win for people and the environment. 8: Decent Work and Economic Growth Digital financial services fuel low-cost business models with the potential to create 95 million new jobs and add 6% to global GDP by 2025. 9: Industry, Innovation and Infrastructure Digital finance enables small businesses to grow, innovate, and reach new markets, bringing more people into the digital economy. 10: Reduced Inequalities Digital finance can be a powerful equalizing force, giving low-income households new tools to increase their incomes, improve financial resilience and access new economic and social opportunities. 11: Sustainable cities and communities Cities rely on crucial public services such as affordable housing and transportation but delivering these services using cash is highly inefficient and costly. Digitizing payments could save 100 major cities $470 billion every year by addressing these inefficiencies and avoidable costs. 13: Climate action Digital finance can help individuals, communities, businesses, and government combat and prepare for the damaging effects of climate change, particularly by building resilience and driving sustainable investments. 16: Peace, Justice and Strong Institutions Digital payments dramatically improve transparency of transactions to and from governments. This helps hold governments accountable to a higher standard for usage of public funds and increases the funds available for vital public services, investments, and transfers. SOURCE: UNSGSA IGNITING SDG PROGRESS THROUGH DIGITAL FINANCIAL INCLUSION USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 68 ANNEX G: INCEPTION REPORT 69 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV E-PESO PERFORMANCE EVALUATION INCEPTION REPORT USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 70 ACRONYMS ACH automated clearing house BIR Bureau of Internal Revenue BSP Bangko Sentral ng Pilipinas CDCS Country Development Cooperation Strategies CDI Cities Development Initiative CLAimDev Collaborating, Learning and Adapting for Improved Development COP Chief of Party COVID-19 coronavirus disease DBM Department of Budget and Management DO Development Objectives DSWD Department of Social Welfare and Development DTI Department of Trade and Industry EQ evaluation question FCR findings, conclusions, and recommendations GPH Government of the Philippines KII key informant interview LGU local government unit MEL Monitoring, Evaluation and Learning NRPS National Retail Payment System PDP Philippine Development Plan PPMI Philippine Payments Management, Inc. PSP payment service providers USAID United States Agency for International Development USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 71 E-PESO ACTIVITY BACKGROUND TABLE 1. ACTIVITY INFORMATION Activity Name E-PESO Implementing Partner Chemonics International Cooperative Agreement number AID-492-C-15-0001 Total Estimated Cost (TEC) $20.9 million Life of Activity March 18, 2015 – February 17, 2021 Active Geographic Regions Philippines Mission Development Objective (DO) CDCS 2013- 2019 DO 1: Broad-based and Inclusive Growth Accelerated and Sustained Mission Development Objective (DO) CDCS 2020-2024 DO 2: Inclusive, Market-Driven Growth Expanded In 2015, a study by the Better than Cash Alliance estimated that 99 percent of payment transactions in the Philippines were conducted through cash86. There is a vast potential for the shift to electronic payments, which has been recognized to provide a wide range of benefits towards promoting economic growth. Benefits include: (a) driving financial inclusion and economic empowerment, particularly among women and youths; (b) improving social protection and humanitarian response systems; (c) enabling more efficient and productive health, agriculture, energy, and other sectors; (d) improving governance, including increased transparency, reduced corruption; and (e) increasing economic growth and market￾level development87. Further, the United Nations recognized the transformative power of digital financial inclusion88, supporting 13 out of the 17 Sustainable Development Goals89. The E-PESO activity aimed to support the Philippines' shift from a cash-intensive to a cash-lite economy by developing an efficient, transparent, and inclusive e-payment ecosystem. This shift to electronic payments is expected to contribute to broad-based economic growth, supporting the US-Philippines Partnership for Growth objectives. The E-PESO activity was also aligned with government priorities— the Philippine Development Plan (PDP) 2011-2016 dedicated one chapter for a resilient and inclusive financial system. Figure 1 presents the E-PESO results framework. It explains the cause-effect relationships among inputs, sub-purposes, and the overall goal. The underlying development hypothesis was: 86 Better than Cash Alliance. 2015. Country Diagnostic: Philippines. 87 Mission Critical: Enabling Digital Payments for Development - A USAID Opportunity Brief 88 The Consultative Group to Assist the Poor or CGAP defined ‘Digital financial inclusion’ as digital access to and use of formal financial services by excluded and underserved populations. 89 A UN compendium on digital financial inclusion presented evidence on how digital financial inclusion can support SDG targets for goals 1-11, 16 and 17.) USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 72 “By promoting the rapid, widespread shift from cash to e-payments usage, E-PESO will support the Philippines to reach a tipping point of e-payment adoption that will represent a critical mass to become a self-sustaining e-payment ecosystem.” FIGURE 2: E-PESO RESULTS FRAMEWORK The overall goal was to have an efficient, transparent, and inclusive retail e-payment system contributing to broad-based growth. This goal was measured by the number and share of e-payment users and the number of financial products, services, or applications designed/enhanced to meet the needs of low￾income clients. Annex A lists the E-PESO indicators in the Statement of Work (SOW). Overall Goal: Efficient, Transparent, and Inclusive Retail E-Payment System Contributes to Broad-Based Growth Sub-Purpose 1: Rapid Adoption of E-payments in Financial System Sub-Purpose 2: Infrastructure for E-payments Expanded Sub-Purpose 3: Enabling Environment for E-payments Improved Input: Transaction drivers Input: Digital infrastructure Input: Enabling environment Cross-cutting Sub-Purpose 4: Build eMoney Ecosystem by Expanding to All Regions of the Cities Development Initiative (CDI) Promote Global Knowledge Sharing on E-payments 73 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV E-PESO's purpose was for the scale of e-payment usage to reach a tipping point, measured by the share of e-payments accounting for retail payment transactions and the number of active e-payment users. The four activity sub-purposes/components are described below90. During its implementation, E-PESO encountered a funding constraint. Only 60 percent of its contract ceiling became available. This resulted in the E-PESO activity not meeting all its objectives. Initially, there were efforts to downgrade the targets, but these were eventually not allowed in the hopes that more funds would be available later91. SUB-PURPOSE 1: RAPID ADOPTION OF E-PAYMENTS IN THE FINANCIAL SYSTEM This component involved support towards the digitization of large-scale payment streams in public and private sectors. E-PESO provided technical assistance to the Government of the Philippines’ (GPH) agencies for improving services delivery and fiscal management through the use of e-payments in various transactions. E-PESO also worked to bring the benefits of digital payments to targeted businesses, such as those from the fast-moving consumer goods industry that have large retail payment flows. SUB-PURPOSE 2: INFRASTRUCTURE FOR E-PAYMENTS EXPANDED This component involved support towards the expansion and effective management of e-payment infrastructure. The E-PESO activity supported the establishment of digital payment services that utilize existing infrastructure under the National Retail Payment System (NRPS)92 policy framework of the Bangko Sentral ng Pilipinas (BSP). These payment services include interoperable digital bills payment services, interoperable cash-in/cash-out agent networks, and merchant payments. The activity helped the industry set up these services and worked with government and private institutional users to pilot and adopt these services. SUB-PURPOSE 3: ENABLING ENVIRONMENT FOR E-PAYMENTS IMPROVED To improve the enabling environment for e-payment usage, E-PESO supported the BSP in establishing and implementing an interoperable NRPS. E-PESO provided technical assistance and training to BSP to promote digital security, consumer protection and confidence, financial inclusion, and e-payment stability within the broader payment system. 90 In the absence of access to the Project Appraisal Document, descriptions of the sub-purposes are based on the completion report. 91 Discussed during the 20 May 2021 consultation meeting with AOR on E-PESO and PRM as part of the preparation of the SOW on the evaluation of E-PESO. 92 Launched in December 2015, the NRPS is a policy and regulatory framework whereby the BSP provides regulatory oversight fundamentally in the form of policy direction to the payment service providers. The framework requires interoperability among the PSPs by creating multilateral arrangements which are referred to as automated clearing houses (ACHs). These ACHs provide detailed rules for clearing and settlement. (BSP Digital Payments Transformation Roadmap 2020-2023) USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 74 SUB-PURPOSE 4: GAPS IN BROADER E-PAYMENT ECOSYSTEM ADDRESSED The E-PESO activity identified and addressed supply and demand constraints to broader e-payment adoption. The activity supported the expansion of e-payment ecosystems, focusing on cities identified under USAID’s Cities Development Initiative (CDI)93. 93 The CDI is a USAID-supported project which aims to strengthen the economic competitiveness and resilience of cities outside of Metro Manila. Under CDI, the USAID provides a range of technical assistance depending on the most urgent needs of the city. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 75 EVALUATION PURPOSE AND QUESTIONS EVALUATION PURPOSE After completing the E-PESO activity in February 2021, USAID/Philippines commissioned this ex-post performance evaluation to gain information on E-PESO’s results and the sustainability of those results. The evaluation will identify the factors that contributed to E-PESO’s results and document the lessons arising from implementation. The lessons learned in this evaluation will be useful in the implementation phase of the next project (Supporting the Policy Enabling Environment for Development or SPEED) in terms of accountability and adaptive learning. Further, this evaluation may inform related development interventions in the future94. As the last year of E-PESO’s implementation was characterized by government-imposed lockdowns and community quarantines due to the coronavirus disease (COVID-19) outbreak, the evaluation will also study how the pandemic affected E-PESO’s implementation as well as the shift to a digital payment agenda. The evaluation also will explore issues related to digital financial inclusion. EVALUATION QUESTIONS This evaluation focuses on the following three evaluation criteria: (a) relevance, (b) effectiveness, and (c) sustainability. Error! Reference source not found. presents the corresponding evaluation questions (EQ). The main evaluation questions (i.e., EQs 1-3) are based on the Task Order95. Specific queries and sub-questions were further developed to answer particular aspects of the evaluation criteria. These evaluation questions will guide the structure of the evaluation tools and the processing and analysis of data. 94 Discussed during the May 20, 2021 consultation meeting as part of the preparation of the Scope of Work (SOW) on the evaluation of E-PESO. The meeting was attended by the AOR of E-PESO and the PRM. 95 Based on the task order, the original evaluation question for relevance was ‘In what ways did E-PESO contribute to addressing the goal of an efficient, transparent, and inclusive retail e-payment system that contributes to broad￾based growth?‘ This was rephrased to emphasize alignment with the Philippine Development Plan based on conversations with the E-PESO and Evaluation Task Order CORs. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 76 TABLE 2. EVALUATION CRITERIA AND QUESTIONS EVALUATION QUESTIONS SUB-QUESTIONS RELEVANCE EQ1: In what ways does E-PESO support the country's national development goals and the USAID's country cooperation strategy objectives? 1.1 In what ways has E-PESO contributed to the priorities of the Philippine Development Plan? 1.1.1 In what ways did E-PESO contribute to the priorities of the previous Philippine Development Plan? 1.1.2 In what ways has E-PESO contributed to the priorities of the current Philippine Development Plan? 1.2 In what ways has E-PESO contributed to the strategies indicated in USAID's CDCS? 1.2.1 In what ways has E-PESO contributed to USAID’s previous country strategy for the Philippines? 1.2.2 In what ways has E-PESO contributed to the current USAID country strategy for the Philippines? 1.3 In what ways has E-PESO contributed to the needs of participating LGUs? 1.4 How did the COVID-19 pandemic affect the shift to the digital payment agenda? 1.4.1 How did the COVID-19 pandemic bring about or highlight concerns related to the shift to digital payments? EFFECTIVENESS EQ2: Did E-PESO achieve the four sub-purposes of developing a lasting and inclusive economic infrastructure and set the stage for new financial products to enter the market? What are the possible reasons for the successes and the failures? 2.1 In what ways did the implementation of E-PESO support the rapid adoption of e-payments in the financial system (sub￾purpose 1)? 2.1.1 What are the factors contributing to the successes? 2.1.2 What are the factors contributing to the challenges? 2.2 In what ways did the implementation of E-PESO support the expansion of infrastructure for e-payments (sub-purpose 2)? 2.2.1 What are the factors contributing to the successes? 2.2.2 What are the factors contributing to the challenges? 2.3 In what ways did the implementation of E-PESO support the improvement of the enabling environment for e-payments (sub-purpose 3)? 2.3.1 What are the factors contributing to the successes? 2.3.2 What are the factors contributing to the challenges? 2.4 In what ways did E-PESO implementation help address gaps in broader e-payment ecosystems (sub-purpose 4)? 2.4.1 What are the factors contributing to the successes? 2.4.2 What are the factors contributing to the challenges? 2.5 What are the financial products, services, or applications developed under E-PESO? 2.5.1 How effective are these financial products, services, or applications in meeting the needs of low-income clients? 2.6.1 Had the pandemic not happened, what would have been the effect in terms of meeting the E-PESO targets? 2.6 What was the effect of the COVID-19 pandemic on the effectiveness of E-PESO? SUSTAINABILITY EQ3: What evidence supports the likelihood that the benefits of the E-PESO will extend past the activity’s period of performance, and what considerations should future similar activities take into account? 77 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 2. EVALUATION CRITERIA AND QUESTIONS EVALUATION QUESTIONS SUB-QUESTIONS 3.1 What evidence supports the likelihood that the benefits of E-PESO will extend after completion? 3.1.1 Are policies in place to support the shift to digital payment agenda? 3.1.2 Are institutional capacities adequate to continue the shift to digital payment agenda? 3.1.3 What were the exit strategies developed for E￾PESO? 3.1.4 Which exit strategies worked and why? 3.1.5 What are the new government targets? 3.1.6 What is the likelihood that the new targets will be met? 3.2 What considerations should future similar activities take into account? 3.2.1 What remains to be the advantage/s of using cash over e-payments? 3.2.2 What are the incentives to encourage the adoption of e-payments further? 3.2.3 What are the remaining factors that are hindering the adoption of e-payments? 3.2.4 What other work is needed to support the shift to digital payment agenda further? 3.2.5 What else should be done to ensure that disadvantaged Filipinos do not get left behind in a digital financial system? USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 78 EVALUATION METHODS AND LIMITATIONS METHODS The evaluation will use a mixed-methods approach, combining qualitative and quantitative data analysis to answer the EQs. It will include a review of project-related documents, a review of secondary data, and key informant interviews (KIIs). This section describes the data collection, data sources, and data analysis methods. Annex B provides the Evaluation Design Matrix summarizing the methodology used to answer each EQ. REVIEW OF PROJECT DOCUMENTS The evaluation will review available E-PESO activity documents acquired from USAID, activity and official sources such as USAID Philippines, GPH, and E-PESO websites. Documents will include USAID’s country strategy documents, national and local government plans, government roadmaps, E-PESO Monitoring, Evaluation and Learning (MEL plans), periodic monitoring reports, completion reports, and other activity technical reports. The evaluators will review documents to understand the activity design and contextualize how the E￾PESO activity supported the goals and objectives of both the government priorities and USAID’s country strategy for the Philippines. The evaluation will provide information about the implementation experience, including the factors that contributed to successes and failures under the activity. The evaluators will analyze performance data from the completion report to provide a quantitative understanding of the achievements upon activity completion. The evaluators will determine other data needed to assess the sustainability of the gains under the activity. Annex C provides an indicative list of project documents and secondary sources for review. REVIEW OF SECONDARY SOURCES The team will gather secondary data from official statistics from government and private sector reports. The team will also obtain secondary data on the activity indicators to compare recent data with completion reports and other available indicators related to e-payments. The evaluation will use comparative and trend analysis of descriptive statistics to analyze the quantitative data to understand the sustainability of gains from E-PESO. The evaluators will also compare trends before and during the COVID-19 pandemic. The team will also use government and private sector institutions’ official reports, press releases, and media reports to understand recent shifts in the digital payment agenda. These developments will include current government initiatives and legislation and policy updates, essential in analyzing sustainability. KEY INFORMANT INTERVIEWS The team will conduct key informant interviews (KIIs) to obtain informed responses to the EQs from key stakeholders. The evaluation will purposively select the respondents from E-PESO’s major counterpart organizations, participating local government units (LGUs), implementing partners, and the 79 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV private sector96. Table 3 presents the proposed KII respondents. Additional respondents may be identified during data collection. TABLE 3. PROPOSED KII RESPONDENTS Raymond Estioko Senior Director Payment System Oversight Department BSP Major Counterpart Gemma Gabuya Pantawid Pamilyang Pilipino Program (4Ps) National Program Manager and Director DSWD Major Counterpart Clarito Alejandro Magsino Functional Group Head Internal Management Group DBM Major Counterpart Blesila Lantayona Undersecretary Regional Operations Group DTI Major Counterpart Lanee Cui-David Deputy Commissioner Information System Bureau of Internal Revenue Major Counterpart Carmelita Araneta General Manager Philippine Payment Management Inc. Major Counterpart Mamerto "Mert" Tangonan Chief of Party Chemonics International Implementing Partner Melissa Cook Former Deputy Chief of Party (2015-2017) Chemonics International Implementing Partner John Geesnell Yap II City Mayor Tagbilaran City Participating LGU Maria Isabelle Climaco City Mayor Zamboanga City Participating LGU Marvin Santos Enterprise Head for the Public Sector PayMaya Private Sector 96 Based on discussions during the in-briefing, the Department of Interior and Local Government was removed from the list of major counterpart organizations. The cities of Tagbilaran (from Visayas) and Zamboanga (from Mindanao) were also identified as LGUs to be interviewed. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 80 Given the COVID-19 restrictions, the evaluation team will do the KIIs remotely using USAID-approved video conference tools, such as Google Meet and Zoom. After receiving consent from the key informant, the evaluation team will record the interviews and use the transcription for the qualitative analysis. Annex D presents the different guides for each of the KIIs. LIMITATIONS The team expects to face some limitations and challenges in conducting this evaluation. These include recall bias and the availability of respondents. The evaluation will be conducted about eight months after activity completion, and respondents may not provide complete answers to the KIIs. The evaluation team will reinforce the interviewee’s responses with information derived from related documents to address this issue. To the extent possible, CLAimDev will complement its document-based research with a series of key informant interviews conducted remotely using video conference tools. It will be challenging to identify information sources as those formerly involved in the activity implementation may be difficult to locate or hesitant to dedicate time. It is also a challenge to secure an appointment with key government officials occupied with COVID-19-related work. To mitigate this, the evaluation team will start the KIIs as soon as possible to provide ample time for data collection. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 81 EVALUATION PHASES AND ACTIVITIES The evaluation will be done from October 1, 2021, to January 30, 2022. The work plan is divided into four phases described below. A detailed evaluation Gantt chart is in Annex F. PHASE 1: INCEPTION REPORT This phase includes inception and in-briefing meetings with USAID Philippines to seek initial guidance and direction. During this phase, the evaluation team will start with document collection and review, drafting of evaluation approach and methods, generation of approved respondents for the KIIs, preparation of evaluation tools and instruments, and the submission of the inception report. Phase 1 concludes with the submission of the Inception Report on October 28 and Inception Report Presentation scheduled on November 5. PHASE 2: PRELIMINARY FINDINGS/ INTERIM BRIEFING The evaluation team will reach out to USAID-approved respondents for the online KIIs. With key informant affirmative consent, the evaluation team will record the interviews and use the meeting software conference function to generate a transcription of the recording. The evaluation team also will manually take notes during all interviews. Depending on the number and length of the interviews, the evaluation team may use NVivo or other qualitative software to analyze the key informant interview transcripts. Desk review of documents and other secondary sources will also continue. Gathered data will be organized consistent with the evaluation design matrix presented in Annex B and triangulated. Preliminary findings will be presented in an interim briefing with USAID. This Phase will begin on or about November 5 and conclude with the Interim Briefing on or about December 15. PHASE 3: FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS (FCR) WORKSHOP AND DRAFT REPORT Key tasks under the third phase will involve data analysis and report writing. The evaluation team will also conduct an FCR workshop with USAID and other stakeholders to validate the draft report. The workshop will also facilitate the drafting of recommendations based on report findings and conclusions. The results of the workshop will serve as an essential input to the draft evaluation report. This Phase will begin on or about December 15 and conclude on or about January 10, 2022. PHASE 4: FINAL REPORT AND LEARNING EVENTS Based on USAID's comments on the draft report, the evaluation team will finalize the report for submission by the end of January 2022. For wider dissemination of findings and lessons learned, two learning events will follow. Error! Reference source not found. presents the indicative timeline for the major deliverables to USAID. Annex E shows the detailed work plan in a Gantt chart. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 82 TABLE 1: MAJOR DELIVERABLES TABLE 4. MAJOR DELIVERABLES KEY TASKS DATES DELIVERABLES TO USAID Evaluation design October 28, 2021 November 5, 2021 Inception Report Inception Report Presentation Data collection December 15, 2021 Interim Briefing Data analysis and report drafting January 5, 2022 January 10, 2022 FCR Workshop Draft Report Report finalization January 31, 2022 Final Report USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 83 EVALUATION TEAM The evaluation team consists of the Collaborating, Learning, and Adapting for Improved Development (CLAimDev)97 team and the external evaluation team. The CLAimDev team provides oversight, quality control, and staff support. The team is composed of the following staff: (a) Chief of Party; (b) Senior Monitoring, Evaluation, and Learning Specialist, (c) Evaluation Manager; and (d) Travel and Meetings Coordinator. The external evaluation team is composed of a team leader and a research assistant. The team will be working under the supervision of CLAimDev’s Evaluation Principal Investigator and Chief of Party (COP). The members and their roles and responsibilities are as follows:  Ms. Maria Lourdes Lopez will serve as the Lead Evaluator. She will oversee all aspects of the evaluation, including the design and the actual conduct of the evaluation. Ms. Lopez will ensure that the work plan is implemented within the authorized budget and on schedule. She will be responsible for drafting and finalizing all assessment deliverables and supervising and working with the Research Assistant.  Mr. Joel Paulin Mendoza, as Research Assistant, will assist the Lead Evaluator in addressing the technical concerns of the assessment. He will provide support in formatting interview and survey questionnaires for remote data collection and maintaining organized evaluation files. He will assist in consolidating and coordinating the evaluation schedules with various stakeholders and offices to plan and carry out KIIs and secondary data gathering. 97 CLAimDev is a Panagora Group lead activity, which supports USAID Philippines to identify and learn from other USAID activities that contribute to the Philippines’ capacity and commitment to self-reliance. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 84 ANNEXES ANNEX A. E-PESO INDICATORS TABLE 1. E-PESO INDICATORS INDICATOR DESCRIPTION & UNIT OF MEASUREMENT REPORTING FREQUENCY DATA SOURCES & COLLECTION METHOD Desired impact (DI): Efficient, Transparent, and Inclusive Retail e-payment System Contributing to Broad-based Growth Indicator D1 1&2: Increased economic opportunity and financial inclusion deepened a) Number of e-payment users b) Percent of population 15 years and above who are e-payment users Number (Cumulative) Percentage (Cumulative) Annual Data source: Bangko Sentral ng Pilipinas Financial Inclusion Dashboard (FID); World Bank Findex 2018. Data is the total of active e-money wallets, prepaid cards linked to e-money, ATM debit cards, and credit cards. The latest available data is for Quarter 4 of 2019. Indicator DI 3: Transparency and efficiency of the retail payment system improved (This indicator will be tracked under Outcome Indicator 3.1 – Financial regulation refined to manage the growth of e-payments.) Indicator DI 4: More predictable and reliable financial tools for the poor Number of financial products, services, or applications that are designed/ enhanced to meet the needs of low￾income clients Number (Cumulative) Annual Financial products, tools, and services were designed to meet the needs of beneficiaries of the DSWD’s Social Amelioration Program and Conditional Cash Transfer Program. (DSWD financial literacy tool and distribution of ATM/debit cards, ReliefAgad self-registration web application for Social Amelioration Program (SAP) beneficiaries, and digital disbursements of SAP subsidies to beneficiaries). Desired Purpose (DP): Scope of e-payment usage reaches tipping point for scale Indicator DP 1: E￾payment accounting for at least 10% of all retail payment transactions Percent of e-payments accounting for retail payment transactions Percentage (Cumulative) Annual (a) Year 1 Actual is carried over from baseline figures of e-payment users derived from registered e-money accounts since the first survey was conducted only in February to March 2016. Year 2 was taken from page 17 of E-PESO’s Philippine Individual Payments Baseline Study (February-March 2016) using Definition 2 of E￾payments. Years 1 and 2 targets derived from the BTCA Philippines Country Diagnostic Study (July 2015) and the Philippine Individual Payments Baseline Survey (February-March 2016) that cover all types of e-card instruments (ATM/debit cards, credit cards, pre-paid cards, and e-money cards). For Indicator DP 1, results from E-PESO’s Institutional Payments Baseline Study (February-April 2017) indicate that 4.39% of all business payment transactions were done using e-payment methods. The State of Digital Payments in the Philippines report estimates the share of digital payments to be 10% by volume and 20% by value in 2018. The study, undertaken by the Better than Cash Alliance (BTCA), 85 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 1. E-PESO INDICATORS INDICATOR DESCRIPTION & UNIT OF MEASUREMENT REPORTING FREQUENCY DATA SOURCES & COLLECTION METHOD seeks to highlight examples of the shift from cash to digital payments by governments, companies, and international organizations. The baseline figure for Year 1 (1.03%) was lifted from the findings of the first BTCA diagnostic, published in 2015. Indicator DP 2: Growth in number of active e￾payment users to reach scale Number of e-payment users Number (Cumulative) Annual The data source is the BSP’s Financial Inclusion Dashboard. The latest available data set is for Quarter 4 of 2019. Data reported is active users for e-wallets only, as the numbers reported for ATM cards, prepaid cards linked to e-money, and credit cards do not indicate the number of active users. Data from e-wallet providers suggest a much higher number, with GCASH alone reporting 26 million active users. SUB-PURPOSE 1: RAPID ADOPTION OF E-PAYMENTS IN THE FINANCIAL SYSTEM Desired Output 1: Rapid Adoptions of E-payments in Financial Systems Indicator DO 1.1: Adoption of new e￾payment services as collections/ disbursement option in five (5) national GPH agencies Number (Cumulative) Annual E-PESO assisted five (5) national government agencies to enable digital collection and disbursements. The high volume and value of supplies and disbursements processed by these agencies maximized the effect of interventions in achieving wholesale adoption of e￾payments by the government and the transacting public (individuals and businesses). E-PESO assisted the Bureau of Internal Revenue in expanding e-payment collection options (online via DBP’s Internet Payment Gateway), LandBank’s Link.Biz portal, Unionbank online portal, and mobile via PayMaya and GCASH). E-PESO assisted the National Meat Inspection Services (NMIS) in making online payments for permits available. E-PESO worked with the Department of Trade and Industry to integrate the Business Name Registration System with online and mobile payment services. With USAID/E-PESO assistance, the Social Security System (SSS) implemented mandatory online transactions and checkless disbursements, providing members, employers, pensioners, and beneficiaries/claimants with faster, safer, more convenient, and economical means to register, submit their loan and benefit applications, and receive their loan proceeds and cash benefits. E-PESO worked with the Department of Social Welfare and Development (DSWD) to disburse the second tranche of the Social Amelioration Program benefits via digital wallets and bank accounts and develop and roll out the web-based registration app, ReliefAgad, facilitating beneficiary registration. Indicator DO 1.2: Adoption of m-money and e-payments in all cities of PFG CDI and other cities/ municipalities Number (Cumulative) Annual USAID/E-PESO provided research, advisory services, partnerships facilitation, and project management assistance to eleven (11)25 partner local government units (LGU) to expand their e-payment ecosystems. Consistent with the ecosystem approach, E-PESO also engaged with the private sector and local financial stakeholders in these areas, including electronic money USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 86 TABLE 1. E-PESO INDICATORS INDICATOR DESCRIPTION & UNIT OF MEASUREMENT REPORTING FREQUENCY DATA SOURCES & COLLECTION METHOD Number of CDIs (& other cities/ municipalities) that introduced or enhanced m-money & e-payment options issuers, e-payment service providers, industry associations, third-party aggregators, banks, and other financial institutions to encourage collections and disbursements via electronic channels. Indicator DO 1.3: New e￾payment implementation and adoption by 300 (small, medium, and large) businesses Number of businesses introducing or enhancing e-payment options as a result of E-PESO support Number (Cumulative) Annual E-PESO exceeded the LOP target (300 small businesses) more than four-fold by working with PPMI to encourage PPMI/PESONet ACH members to shift corporate clients to e-payments. The number of businesses is the aggregate total of enterprise clients of some PESONet ACH Members utilizing PESONet. Indicator DO 1.4: Over 16,000 people trained (via consumer education) on the uses of e-payments and m-money services for improved household financial management Number of people trained (via consumer education) on the uses of e-payments Number (Cumulative) Annual USAID/E-PESO will be reporting only 75% of the 16,000 LOP target, as the training for the DSWD’s financial literacy program supporting the disbursement of conditional cash transfer benefits to transactional accounts will commence in February 2021. SUB-PURPOSE 2: INFRASTRUCTURE FOR E-PAYMENTS EXPANDED Desired Outcome 2: Infrastructure for E-payments Expanded Indicator DO 2.1: Growth of front-end e￾payment infrastructure expanded Number of institutions supported by E-PESO to improve and/or expand other front-end infrastructure Number (Cumulative) Annual Definition of front-end infrastructure is any user interface or device needed by individual users to conduct e-payment transactions and any computer system, software application, and/or device used by an institution or individual user to complete e-payment transactions. Indicator DO 2.2: Back￾end infrastructure strengthened Number of institutions supported by E-PESO to improve and/or expand their back-end infrastructure Number (Cumulative) Annual Definition for back-end infrastructure is any system at the back-office operation of an institution required to allow and process e-payment transactions coming from the front-end infrastructure and any system from financial institutions connected to switch operators appointed by the automated clearing house 75 | USAID/E-PESO PROJECT Final Report (January 2021) participants used to process and settle e-payment transactions. 87 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 1. E-PESO INDICATORS INDICATOR DESCRIPTION & UNIT OF MEASUREMENT REPORTING FREQUENCY DATA SOURCES & COLLECTION METHOD Indicator DO 2.3: E￾payment infrastructure gaps identified Number of gap analysis reports at industry or ecosystem level Number (Cumulative) Annual Gap analysis reports are studies done to assess demand, supply, or infrastructure gaps within an entire industry or e-payments ecosystem at a regional or national scale. This does not apply to gap analysis reports done at the firm or institutional level during a partner engagement. Reports include: an evaluation of the e-payments Landscape, the Philippine Individual Payments Baseline Survey, Philippine Agent Network Study, Gap analysis Report on the Evaluation of Existing BSP Digital Security Policy Areas Vis-à-vis Recommended Leading Standards on Digital Security Policies, Philippine Institutional E-payments Baseline Survey, and the Agent cash-in/cash-out network concept note SUB-PURPOSE 3: ENABLING ENVIRONMENT FOR E-PAYMENTS IMPROVED Desired Outcome 3: Enabling Environment for E-payments Improved Indicator DO 3.1: Financial regulation refined to manage the growth of e-payments a) No. of circulars, regulations, and/or local ordinances refined or clarified to support e￾payment growth b) No. of public-private dialogues to support strengthening e-payment environment Number (Cumulative) Annual Indicator 3.1 looks at the laws, circulars, regulations, and ordinances enacted to support e-payment growth. Often, there are public-private dialogues supporting efforts to introduce such rules and regulations. Data reported are dialogues/roundtables/consultation meetings with various stakeholders, including regulators, businesses and/or financial institutions. Indicator DO 3.2: Increased competition among m-money and e￾payment platforms Number of policies removed or added to reduce barriers and encourage competition Number (Cumulative) Annual Increased competition among m -money and e-payment platforms is a contextual indicator. In collaboration with the BSP, this refers to the number of policies removed or added to reduce barriers and encourage competition in e-payments. Indicator DO 3.3: Interoperability in the national payment system achieved Number (Index) Annual Interoperability in the national payment system achieved is an indicator based on qualitative research. Indicator 3.3 tracks milestones in the development of the NRPS as measured through five levels: 1) Theoretically interoperable. 2) Technically interoperable. 3) Functionally interoperable. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 88 TABLE 1. E-PESO INDICATORS INDICATOR DESCRIPTION & UNIT OF MEASUREMENT REPORTING FREQUENCY DATA SOURCES & COLLECTION METHOD 4) Interconnected; and 5) Effectively interconnected, as explained by the Alliance for Financial Inclusion (AFI). By Year 4, interoperability scores shall be disaggregated by use case to track various e -payment modes. With the issuance of BSP Circular No. 980 – specifically Subsec. X1205.5/41205Q.5/4705S./4705P.5/4805N.5a. stating, “(1) BSFIs shall make electronic payments available in all its delivery channels when applicable; (2) BSFIs shall enable its clients to move/receive funds to/from an account with other BSFIs, or, at a minimum, receive funds. Movement of funds between BSFIs shall be carried out through participation in an ACH” – interoperability of the various payment streams is assured. The ACH clearing rules detail the terms of the interoperability Indicator DO 3.4: Increased consumer awareness and trust in e￾payments a) % of the population 15 years old and over aware of e-payments b) % of the population 15 years old and over that trust the e-payment system Number (Percentage) Annual Year 1 figures are derived from the Philippine Individual Payments Baseline Survey covering all e-card instruments (ATM/debit cards, credit cards, pre-paid cards, and e-money cards). The payments study asked direct questions on awareness and trust to randomly selected individually paying decision-makers across the Philippines. Indicator 3.4 (increased consumer awareness and trust in e-payments) shows only annual targets since the method to track awareness and trust in e -payments is through surveys conducted by E -PESO or BSP. BSP’s 2017 and 2019 Financial Inclusion Survey (FIS) presented data on the percentage of survey respondents that do not trust electric platforms (15% of respondents) rather than the percentage of respondents that trust e-payment systems. Similarly, the survey reported the % of respondents who are not aware (40%) of electronic platforms rather than the percentage of those aware. The BTCA State of Digital Payments in the Philippines (December 2019) references BSP’s 2017 FIS. Indicator DO 3.5: Security measures in e￾payments strengthened Number of guidelines developed and forums held that promote awareness on digital security best practices or consumer protection Number (Cumulative) Annual Indicators 3.5 and 3.6 refer to milestones on guidelines, fora, and articles of a cross-cutting nature revolving around digital security, consumer protection, and knowledge sharing of best practices. Activities related to these indicators seek to inform and support regulators, industry players, and the public on the latest e -payments trends. Y2 and Y 3 activities for Indicator 3.5 were consumer education campaigns designed and organized by E -PESO and hosted by LGUs or their private partners. Indicator DO 3.6: Global knowledge-sharing of e￾payments promoted a) No. of articles promoting e-payments Number (Cumulative) Annual Various articles promoting e-payments. 89 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 1. E-PESO INDICATORS INDICATOR DESCRIPTION & UNIT OF MEASUREMENT REPORTING FREQUENCY DATA SOURCES & COLLECTION METHOD b) No. of global knowledge-sharing events that highlight the Philippines e-payment environment/ players STANDARD INDICATORS 2.2.3-5 Number of sub￾national entities receiving USG assistance that improves their performance Number (Cumulative) Annual This indicator is like Indicator 1.2, which tracks CDIs/other cities and municipalities and receives E￾PESO assistance. Targets are derived from the same set as Indicator 1.2: Adoption of m-money and e-payments in all cities of PFG CDI and other cities/municipalities. Please refer to the note on Indicator 1.2 for this indicator. GNDR-2 Percentage of female participants in USG-assisted programs designed to increase access to productive economic resources (assets, credit, income, or employment) Number (Percentage) Annual This assumes a 1:1 ratio of females trained for every male. This is based on the Philippine Individual Payments Baseline Survey, where there is an equal ratio of males/females in the sample population. Generally, the broader Philippine population also has a sex ratio of 102 males for 100 females. Source: http://www.pcw.gov.ph/statistics/201405/population￾families-and-household-statistics, accessed May 18, 2016. PPP3 Number of organizations (for and not-for-profit, and government) that have applied new technologies and/or management practices due to USG￾supported Public-Private Partnerships (PPPs) Number (Cumulative) Annual Targets are derived from the same set as Indicators 1.1, 1.2, and 1.3, where the number of institutions that have applied new technologies and/or management practices due to E-PESO-supported Public-Private Partnerships (PPPs) is identified. EG.4.2-1 Total number of clients benefitting from financial services provided through USG-assisted financial intermediaries, including financial institutions or actors Number (Cumulative) Annual These are derived from the number of people trained (via consumer education) on the uses of e-payments. EG.4.2-2 Number of financial intermediaries serving poor households and microenterprises supported by USG assistance Number (Cumulative) Annual Direct count of financial intermediaries including banks, microfinance institutions, and cooperatives (Land Bank, GCash, PayMaya, Dungganon Rural Bank). EG.4.2-4 Number of days of USG-funded training provided to support microenterprises development Number (Cumulative) Annual USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 90 TABLE 1. E-PESO INDICATORS INDICATOR DESCRIPTION & UNIT OF MEASUREMENT REPORTING FREQUENCY DATA SOURCES & COLLECTION METHOD EG.5-3 Number of microenterprises supported by USG assistance Number (Cumulative) Annual 91 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV ANNEX B: EVALUATION DESIGN MATRIX The following table provides a summary of the evaluation questions, data, and data analysis approach used for this evaluation: TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS RELEVANCE EQ1: In what ways does E-PESO support the country's national development goals and the USAID's country cooperation strategy objectives? 1.1 In what ways has E-PESO contributed to the priorities of the Philippine Development Plan during appraisal and this evaluation? 1.1.1 In what ways has E-PESO contributed to the priorities of the Philippine Development Plan during the appraisal? - Philippine Development Plan (previous) - government roadmaps (previous) - Desk review - Content analysis 1.1.2 In what ways has E-PESO contributed to the priorities of the current Philippine Development Plan? - Philippine Development Plan (current) - government roadmaps (current) 1.2 In what ways has E-PESO contributed to the strategies indicated in USAID's CDCS during appraisal and during this evaluation? 1.2.1 In what ways has E-PESO contributed to USAID country strategy for the Philippines during the appraisal? - USAID PH country planning documents (previous) - Desk review - Content analysis 1.2.2 In what ways has E-PESO contributed to the current USAID country strategy for the Philippines? - USAID PH country planning documents (current) 1.3 In what ways has E-PESO contributed to the needs of participating LGUs? - local development plans - KII reports - Desk review - KII -Content Analysis USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 92 TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS 1.4 How did the COVID-19 pandemic affect the shift to the digital payment agenda? 1.4.1 1.4.1 How did the COVID-19 pandemic bring about or highlight concerns related to the shift to digital payment? - project documents - secondary sources - KII reports EFFECTIVENESS EQ2: Did E-PESO achieve the four sub-purposes of developing a lasting and inclusive economic infrastructure and set the stage for new financial products to enter the market? What are the possible reasons for the successes and the failures? 2.1 In what ways did the implementation of E-PESO support the rapid adoption of e￾payments in the financial system (sub-purpose 1)? 2.1.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.1.2 What are the factors contributing to the challenges? - project documents - secondary sources - KII reports 2.2 In what ways did the implementation of E-PESO support the expansion of infrastructure for e-payments (sub-purpose 2)? 2.2.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis 2.2.2 What are the factors - Descriptive statistics contributing to the challenges? - project documents - secondary sources - KII reports 2.3 In what ways did the implementation of E-PESO support the improvement of the enabling environment for e￾payments (sub-purpose 3)? 2.3.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.3.2 What are the factors contributing to the challenges? - project documents - secondary sources - KII reports 93 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS 2.4 In what ways did the implementation of E-PESO help address gaps in broader e￾payment ecosystems (sub￾purpose 4)? 2.4.1 What are the factors contributing to the successes? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.4.2 What are the factors contributing to the challenges? - project documents - secondary sources - KII reports 2.5 What are the financial products, services, or applications developed under E￾PESO? 2.5.1 How effective are these financial products, services, or applications in meeting the needs of low-income clients? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis - Descriptive statistics 2.6 What was the effect of the COVID-19 pandemic on the effectiveness of E-PESO? 2.6.1 Had the pandemic not happened, what would have been the effect in terms of meeting the E￾PESO targets? - KII reports - KII - Content analysis SUSTAINABILITY EQ3: What evidence supports the likelihood that the benefits of the E-PESO will extend past the activity’s period of performance, and what considerations should future similar activities take into account? 3.1 What are the pieces of evidence supporting the likelihood that the benefits of E￾PESO will extend after completion? 3.1.1 Are policies in place to support the shift to digital payment agenda? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis 3.1.2 Are institutional capacities adequate to continue the shift to digital payment agenda? - project documents - secondary sources - KII reports 3.1.3 What were the exit strategies developed for E-PESO? - project documents - KII reports USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 94 TABLE 1. EVALUATION DESIGN EVALUATION QUESTION SUB-QUESTIONS DATA SOURCE(S) DATA COLLECTION METHOD DATA ANALYSIS METHODS 3.1.4 Which exit strategies worked and why? - project documents - secondary sources - KII reports - Desk review - KII 3.1.5 What are the new - Content analysis government targets? - secondary sources - KII reports 3.1.6 What is the likelihood that the new targets will be met? - secondary sources - KII reports 3.2 What considerations should future similar activities take into account? 3.2.1 What remains to be the advantage/s of using cash over e￾payments? - secondary sources - KII reports - Desk review - KII - Content analysis 3.2.2 What are the incentives to further encourage the adoption of e-payments? - project documents - secondary sources - KII reports 3.2.3 What are the remaining factors that are hindering the adoption of e-payments? - project documents - secondary sources - KII reports - Desk review - KII - Content analysis 3.2.4 What other works are needed to support the shift to digital payment agenda further? - project documents - secondary sources - KII reports 3.2.5 What else should be done to ensure that disadvantaged Filipinos don’t get left behind? - project documents - secondary sources - KII reports 95 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV ANNEX C: LIST OF DOCUMENTS Project Documents  USAID Country Development Cooperation Strategy 2019-2024  USAID Country Development Cooperation Strategy 2013-2019  E-PESO Final Report  E-PESO Monitoring and Evaluation Plan (September 8, 2020)  E-PESO 2nd Annual Report (October 2015 – September 2016)  E-PESO 3rd Annual Report (October 2016 – September 2017)  E-PESO End of Contractor Report on Shared Cash Agent Network  E-PESO Final Consultant Report on Continuing Revenue Regulation Review and Pan-European Public Procurement Online Business Case/ Implementation Plan Formulation  E-PESO Contractor’s Completion Report on the Implementation of the National Survey, E￾PESO research notes, and partnership building  E-PESO Short-term Consultant Report on the Development of E-payments Module  E-PESO Component 1 STTC Activity Report  E-PESO Fact Sheet  Better than Cash Alliance Reports 2019  Better than Cash Alliance Reports 2021 List of documents to be requested  Project Appraisal Document  E-PESO Original MEL Plan  E-PESO Annual and Quarterly Reports (other than those already available)  E-PESO Contractor’s Completion Report (other than those already available)  E-PESO Technical Reports and Studies (other than those already available) Other Documents  Philippine Development Plan 2011-2016  Philippine Development Plan 2017-2022  BSP Digital Payments Transformation Roadmap 2020-2023  BSP 2019 Financial Inclusion Survey Report  Mission Critical: Enabling Digital Payments for Development – A USAID Opportunity Brief  Philippine Institute for Development Studies. 2021. Bridging the digital infrastructure gap: Policy options for connecting Filipinos  UNSGSA Igniting SDG Progress through Digital Financial Inclusion News articles and Videos  Philippine Daily Inquirer, The Great Divide.  Business World Insights: Enabling LGUs in the New Normal through Digital Payments Acceptance.  Business World Insights: Creating Digital Ecosystems to Jumpstart Local Economies. USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 96 ANNEX D: KII GUIDES ANNEX D.1: KII GUIDE FOR MAJOR COUNTERPARTS Introduction Hello, my name is Maria Lourdes Lopez, and I am an external evaluator consultant for Panagora Group. I am joined by Mr. Joel Mendoza, who is also an external consultant for Panagora Group. Purpose USAID asked the Panagora Group to conduct an ex-post evaluation of the E-PESO Activity. As you may know, the E-PESO is a USAID-supported activity that was implemented from March 18, 2015, to February 17, 2021. The E-PESO activity aimed to support the Philippines’ shift from a cash￾intensive to a cash-lite economy by developing an efficient, transparent, and inclusive e-payment ecosystem. The E-PESO has four main components, which include: (a) Rapid Adoption of E-payments in Financial System; (b) Infrastructure for E-payments Expanded; Enabling Environment for E￾Payments Improved; (d) Gaps in Broader e-Payment Ecosystem Addressed The evaluation aims to assess the gains and the sustainability of those gains from the E-PESO activity. It will also help ensure that future development efforts use the valuable experiences and insights from the implementation of the E-PESO. We are meeting with you because of your familiarity with E-PESO implementation and your involvement in the shift to the digital payments agenda. Because our goal is to learn from both the positive and negative aspects of E-PESO, we ask that you be as honest as possible in your responses. If you wish that some or all of your comments be anonymous, please let us know, and we will ensure that your name and identifying characteristics will not be associated with those comments. Interview Process The interview should take us about 30-45 minutes. Consent Before we start with introductions and interview questions, we are required to ask for your consent. - You have the right not to participate. This is voluntary. - You have the right to stop at any point. - If there is anything you do not understand, please ask me to clarify. - You have the right to decline to answer any question. - The information you provide is only for our evaluation, and your responses will be kept in the strictest confidentiality. Do we have your consent for an interview? Date : ______________ Participant Name : ______________ Organization : ______________ Location/Time : ______________ 97 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV Gender of Respondent : ______________ SECTION 1 – BACKGROUND 1. What role or roles did you play in the implementation of the E-PESO activity? [The following are possible prompts]  Role in the adoption of e-payments in the financial system (sub-purpose 1)  Role in the expansion of infrastructure for e-payments (sub-purpose 2)  Role in the improvement of the enabling environment for e-payments (sub-purpose 3)  Role in addressing gaps in broader e-payment ecosystems (sub-purpose 4) SECTION 2 – RELEVANCE 2. Based on your opinion, in what ways has E-PESO contributed to the priorities of the Philippine Development Plan during appraisal and during the evaluation? (1.1.1, 1.1.2) 3. Based on your opinion, in what ways has E-PESO contributed to the strategies indicated in USAID's CDCS during appraisal and during the evaluation? (1.2.1, 1.2.2) 4. In what ways has E-PESO contributed to the needs of participating LGUs? (1.3) 5. How did the COVID-19 pandemic affect the shift to the digital payment agenda? (1.4) 6. How did the COVID-19 pandemic bring about or highlight concerns related to the shift to digital payment? (1.4.1) SECTION 3 – EFFECTIVENESS 7. What do you think were the main accomplishments of E-PESO concerning the sub-purpose/s you were involved in? (2.1, 2.2, 2.3, 2.4) USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 98 8. What are the plausible reasons for these accomplishments? (2.1.1, 2.2.1, 2.3.1, 2.4.1) 9. In what aspects did E-PESO fall short of expectations? (2.1, 2.2, 2.3, 2.4) 10. What are the plausible reasons for these shortfalls? (2.1.2, 2.2.2, 2.3.2, 2.4.2) 11. What are the financial products, services, or applications developed under E-PESO? (2.5) 12. How effective are these financial products, services, or applications in meeting the needs of low￾income clients? (2.5.1) 13. Had the pandemic not happened, what would have been the effect in terms of meeting the E￾PESO targets? (2.6.1) 99 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV SECTION 4 – SUSTAINABILITY 14. What are the government policies in place to support the shift to the digital payment agenda? (3.1.1) 15. Are there existing government plans and roadmaps that you know? (3.1.1) a. Concerning your organization? (3.1.1) b. As a whole? [Including those outside your organization.] (3.1.1) 16. What capacities did E-PESO help build in your organization? (3.1.2) 17. Is your organization continuing the activities conducted under E-PESO? [If yes, go to Question 18. If not, go to Question 21.] (3.1.2) 18. In what way is your organization continuing the activities conducted under E-PESO? (3.1.2) 19. Is there sufficient organizational capacity to implement said activities? (3.1.2) 20. Are there indicative results from said activities? (3.1.2) 21. Were there exit strategies developed for your organization under E-PESO? [If yes, go to Question 22. If not, go to Question 23.] (3.1.3) 22. Which exit strategies worked and why? (3.1.4) 23. About the shift to digital payments agenda, what are the new government targets in your organization? (3.1.5) USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 100 24. What is the likelihood that the new targets will be met? (3.1.6) 25. What remains to be the advantage/s of using cash over e-payments? (3.2.1) 26. What are the incentives to further encourage the shift to digital payment? a. To encourage consumers? Are there specific considerations for disadvantaged Filipinos? (3.2.2, 3.2.5) b. To encourage businesses? (3.2.2) c. To encourage government (national and local)? (3.2.2) 27. What do you think are the remaining challenges in the shift to the digital payment agenda? (3.2.3) 28. What are other works needed to support the shift to digital payment agenda further? a. Concerning your organization? (3.2.4) b. As a whole? [Including those outside your organization.] (3.2.4) 29. What are other works needed to ensure that disadvantaged Filipinos don’t get left behind? (3.2.5) SECTION 5 – CONCLUSION 30. If E-PESO could be redesigned or re-implemented, what changes would you propose in light of what you now know? [This would be the final question] (3.2) 31. Are there any other insights that you wish to share with us? 32. Are there any data that you think would be useful for this evaluation? 101 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV 33. Is there anyone else who you think would have valuable insights for this evaluation? [If applicable, ask who to contact for identified data gaps possibly.] [Thank the respondent for his/her time.] [Tell the respondent that he/she is welcome to contact you to ask questions at a later date if they wish.] USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 102 ANNEX D.2: KII GUIDE FOR IMPLEMENTING PARTNER Introduction Hello, my name is Maria Lourdes Lopez, and I am an external evaluator consultant for Panagora Group. I am joined by Mr. Joel Mendoza, who is also an external consultant for Panagora Group. Purpose USAID asked the Panagora Group to conduct an ex-post evaluation of the E-PESO Activity. As you may know, the E-PESO is a USAID-supported activity that was implemented from March 18, 2015, to February 17, 2021. The E-PESO activity aimed to support the Philippines’ shift from a cash￾intensive to a cash-lite economy by developing an efficient, transparent, and inclusive e-payment ecosystem. The E-PESO has four main components, which include: (a) Rapid Adoption of E-payments in Financial System; (b) Infrastructure for E-payments Expanded; Enabling Environment for E￾Payments Improved; (d) Gaps in Broader e-Payment Ecosystem Addressed The evaluation aims to assess the gains and the sustainability of those gains from the E-PESO activity. It will also help ensure that future development efforts use the valuable experiences and insights from the implementation of the E-PESO. We are meeting with you because of your familiarity with E-PESO implementation and your involvement in the shift to the digital payments agenda. Because our goal is to learn from both the positive and negative aspects of E-PESO, we ask that you be as honest as possible in your responses. If you wish that some or all of your comments be anonymous, please let us know, and we will ensure that your name and identifying characteristics will not be associated with those comments. Interview Process The interview should take us about 30-45 minutes. Consent Before we start with introductions and interview questions, we are required to ask for your consent. - You have the right not to participate. This is voluntary. - You have the right to stop at any point. - If there is anything you do not understand, please ask me to clarify. - You have the right to decline to answer any question. - The information you provide is only for our evaluation, and your responses will be kept in the strictest confidentiality. Do we have your consent for an interview? Date : ______________ Participant Name : ______________ Organization : ______________ Location/Time : ______________ 103 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV Gender of Respondent : ______________ SECTION 1 – BACKGROUND 1. What role or roles did you play in the implementation of the E-PESO activity? SECTION 2 – RELEVANCE 2. Based on your opinion, In what ways has E-PESO contributed to the priorities of the Philippine Development Plan during appraisal and during the evaluation? (1.1.1, 1.1.2) 3. Based on your opinion, In what ways has E-PESO contributed to the strategies indicated in USAID's CDCS during appraisal and during the evaluation? (1.2.1, 1.2.2) 4. In what ways has E-PESO contributed to the needs of participating LGUs? (1.3) 5. How did the COVID-19 pandemic affect the shift to the digital payment agenda? (1.4) 6. How did the COVID-19 pandemic bring about or highlight concerns related to the shift to digital payment? (1.4.1) SECTION 3 – EFFECTIVENESS 7. What do you think were the main accomplishments of E-PESO concerning the sub-purpose/s you were involved in? (2.1, 2.2, 2.3, 2.4) 8. What are the plausible reasons for these accomplishments? (2.1.1, 2.2.1, 2.3.1, 2.4.1) 9. In what aspects did E-PESO fall short of expectations? (2.1, 2.2, 2.3, 2.4) 10. What are the plausible reasons for these shortfalls? (2.1.2, 2.2.2, 2.3.2, 2.4.2) USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 104 11. What are the financial products, services, or applications developed under E-PESO? (2.5) 12. How effective are these financial products, services, or applications in meeting the needs of low￾income clients? (2.5.1) 13. Had the pandemic not happened, what would have been the effect in terms of meeting the E￾PESO targets? (2.6.1) SECTION 4 – SUSTAINABILITY 14. What are the government policies in place to support the shift to the digital payment agenda? (3.1.1) 15. Are there existing government plans and roadmaps that you know? (3.1.1) 16. What capacities did E-PESO help build in your organization? (3.1.2) 17. Would you know if government agencies are continuing the activities conducted under E-PESO? [If yes, go to Question 18. If not, go to Question 21.] (3.1.2) 18. In what way are these government agencies continuing the activities conducted under E-PESO? (3.1.2) 19. Is there sufficient organizational capacity to implement said activities? (3.1.2) 20. Are there indicative results from said activities? (3.1.2) 105 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV 21. Were there exit strategies developed for your organization under E-PESO? [If yes, go to Question 22. If not, go to Question 23.] (3.1.3) 22. Which exit strategies worked and why? (3.1.4) 23. About the shift to the digital payments agenda, would you know the new government targets? (3.1.5) 24. What is the likelihood that the new targets will be met? (3.1.6) 25. What remains to be the advantage/s of using cash over e-payments? (3.2.1) 26. What are the incentives to further encourage the shift to digital payment? d. To encourage consumers? Are there specific considerations for disadvantaged Filipinos? (3.2.2, 3.2.5) e. To encourage businesses? (3.2.2) f. To encourage government (national and local)? (3.2.2) 27. What do you think are the remaining challenges in the shift to the digital payment agenda? (3.2.3) 28. What are other works needed to support the shift to digital payment agenda further? 29. What are other works needed to ensure that disadvantaged Filipinos don’t get left behind? (3.2.5) SECTION 5 – CONCLUSION USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 106 30. If E-PESO could be redesigned or re-implemented, what changes would you propose in light of what you now know? [This would be the final question] (3.2) 31. Are there any other insights that you wish to share with us? 32. Are there any data that you think would be useful for this evaluation? 33. Is there anyone else who you think would have valuable insights for this evaluation? [If applicable, ask who to contact for identified data gaps possibly.] [Thank the respondent for his/her time.] [Tell the respondent that he/she is welcome to contact you to ask questions at a later date if they wish.] 107 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV ANNEX D.3: KII GUIDE FOR PARTICIPATING LGU Introduction Hello, my name is Maria Lourdes Lopez, and I am an external evaluator consultant for Panagora Group. I am joined by Mr. Joel Mendoza, who is also an external consultant for Panagora Group. Purpose USAID asked the Panagora Group to conduct an ex-post evaluation of the E-PESO Activity. As you may know, the E-PESO is a USAID-supported activity that was implemented from March 18, 2015, to February 17, 2021. The E-PESO activity aimed to support the Philippines’ shift from a cash￾intensive to a cash-lite economy by developing an efficient, transparent, and inclusive e-payment ecosystem. The E-PESO has four main components, which include: (a) Rapid Adoption of E-payments in Financial System; (b) Infrastructure for E-payments Expanded; Enabling Environment for E￾Payments Improved; (d) Gaps in Broader e-Payment Ecosystem Addressed The evaluation aims to assess the gains and the sustainability of those gains from the E-PESO activity. It will also help ensure that future development efforts use the valuable experiences and insights from the implementation of the E-PESO. We are meeting with you because of your familiarity with E-PESO implementation and your involvement in the shift to the digital payments agenda. Because our goal is to learn from both the positive and negative aspects of E-PESO, we ask that you be as honest as possible in your responses. If you wish that some or all of your comments be anonymous, please let us know, and we will ensure that your name and identifying characteristics will not be associated with those comments. Interview Process The interview should take us about 30-45 minutes. Consent Before we start with introductions and interview questions, we are required to ask for your consent. - You have the right not to participate. This is voluntary. - You have the right to stop at any point. - If there is anything you do not understand, please ask me to clarify. - You have the right to decline to answer any question. - The information you provide is only for our evaluation, and your responses will be kept in the strictest confidentiality. Do we have your consent for an interview? Date : ______________ Participant Name : ______________ Organization : ______________ Location/Time : ______________ Gender of Respondent : ______________ USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 108 SECTION 1 – BACKGROUND 1. What role or roles did you play in the implementation of the E-PESO activity? SECTION 2 – RELEVANCE 2. In what ways has E-PESO contributed to the needs of your city? (1.3) 3. How did the COVID-19 pandemic affect the shift to the digital payment agenda? (1.4) 4. How did the COVID-19 pandemic bring about or highlight concerns related to the shift to digital payment? (1.4.1) SECTION 3 – EFFECTIVENESS 5. What do you think were the main accomplishments of E-PESO concerning the sub-purpose/s you were involved in? (2.1, 2.2, 2.3, 2.4) 6. What are the plausible reasons for these accomplishments? (2.1.1, 2.2.1, 2.3.1, 2.4.1) 7. In what aspects did E-PESO fall short of expectations? (2.1, 2.2, 2.3, 2.4) 8. What are the plausible reasons for these shortfalls? (2.1.2, 2.2.2, 2.3.2, 2.4.2) 9. What are the financial products, services, or applications developed under E-PESO? (2.5) 10. How effective are these financial products, services, or applications in meeting the needs of low￾income clients? (2.5.1) 109 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV 11. Had the pandemic not happened, what would have been the effect in terms of meeting the E￾PESO targets? (2.6.1) SECTION 4 – SUSTAINABILITY 12. What are the government policies in place to support the shift to the digital payment agenda? (3.1.1) 13. Are there existing government plans and roadmaps that you know? (3.1.1) a. Concerning your city? (3.1.1) b. As a whole? [Including those outside your city?] (3.1.1) 14. What capacities did E-PESO help build in your city? (3.1.2) 15. Is your city continuing the activities conducted under E-PESO? [If yes, go to Question 18. If not, go to Question 21.] (3.1.2) 16. In what way is your city continuing the activities conducted under E-PESO? (3.1.2) 17. Is there sufficient organizational capacity to implement said activities? (3.1.2) 18. Are there indicative results from said activities? (3.1.2) 19. Were there exit strategies developed for your city under E-PESO? [If yes, go to Question 22. If not, go to Question 23.] (3.1.3) 20. Which exit strategies worked and why? (3.1.4) USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 110 21. About the shift to the digital payments agenda, what are the new government targets in your city? (3.1.5) 22. What is the likelihood that the new targets will be met? (3.1.6) 23. What remains to be the advantage/s of using cash over e-payments? (3.2.1) 24. What are the incentives to further encourage the shift to digital payment? g. To encourage consumers? Are there specific considerations for disadvantaged Filipinos? (3.2.2, 3.2.5) h. To encourage businesses? (3.2.2) i. To encourage government (national and local)? (3.2.2) 25. What do you think are the remaining challenges in the shift to the digital payment agenda? (3.2.3) 26. What are other works needed to support the shift to digital payment agenda further? a. Concerning your city? (3.2.4) b. As a whole? [Including those outside your city.] (3.2.4) 27. What are other works needed to ensure that disadvantaged Filipinos don’t get left behind? (3.2.5) SECTION 5 – CONCLUSION 28. If E-PESO could be redesigned or re-implemented, what changes would you propose in light of what you now know? [This would be the final question] (3.2) 111 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV 29. Are there any other insights that you wish to share with us? 30. Are there any data that you think would be useful for this evaluation? 31. Is there anyone else who you think would have valuable insights for this evaluation? [If applicable, ask who to contact for identified data gaps possibly.] [Thank the respondent for his/her time.] [Tell the respondent that he/she is welcome to contact you to ask questions at a later date if they wish.] USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 112 ANNEX D.4: KII GUIDE FOR PRIVATE SECTOR Introduction Hello, my name is Maria Lourdes Lopez, and I am an external evaluator consultant for Panagora Group. I am joined by Mr. Joel Mendoza, who is also an external consultant for Panagora Group. Purpose USAID asked the Panagora Group to conduct an ex-post evaluation of the E-PESO Activity. As you may know, the E-PESO is a USAID-supported activity that was implemented from March 18, 2015, to February 17, 2021. The E-PESO activity aimed to support the Philippines’ shift from a cash￾intensive to a cash-lite economy by developing an efficient, transparent, and inclusive e-payment ecosystem. The E-PESO has four main components, which include: (a) Rapid Adoption of E-payments in Financial System; (b) Infrastructure for E-payments Expanded; Enabling Environment for E￾Payments Improved; (d) Gaps in Broader e-Payment Ecosystem Addressed The evaluation aims to assess the gains and the sustainability of those gains from the E-PESO activity. It will also help ensure that future development efforts use the valuable experiences and insights from the implementation of the E-PESO. We are meeting with you because of your familiarity with E-PESO implementation and your involvement in the shift to the digital payments agenda. Because our goal is to learn from both the positive and negative aspects of E-PESO, we ask that you be as honest as possible in your responses. If you wish that some or all of your comments be anonymous, please let us know, and we will ensure that your name and identifying characteristics will not be associated with those comments. Interview Process The interview should take us about 30-45 minutes Consent Before we start with introductions and interview questions, we are required to ask for your consent. - You have the right not to participate. This is voluntary. - You have the right to stop at any point. - If there is anything you do not understand, please ask me to clarify. - You have the right to decline to answer any question. - The information you provide is only for our evaluation, and your responses will be kept in the strictest confidentiality. Do we have your consent for an interview? Date : ______________ Participant Name : ______________ Organization : ______________ Location/Time : ______________ 113 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV Gender of Respondent : ______________ SECTION 1 – BACKGROUND 1. Was your company’s participation in the implementation of the E-PESO activity? SECTION 2 – RELEVANCE 2. How relevant is the shift to digital payment agenda to your company objectives and goals? (1.1) 3. What made your company decide to participate in the activities of E-PESO? (1.1) 4. From your company’s experience, how did the COVID-19 pandemic affect the shift to the digital payment agenda? (1.4) 5. How did the COVID-19 pandemic bring about or highlight concerns related to the shift to digital payment? (1.4.1) SECTION 3 – EFFECTIVENESS 6. What do you think were the main accomplishments brought about by your company’s participation in E-PESO? (2.1, 2.2, 2.3, 2.4) 7. What are the plausible reasons for these accomplishments? (2.1.1, 2.2.1, 2.3.1, 2.4.1) 8. In what aspects did E-PESO fall short of expectations? (2.1, 2.2, 2.3, 2.4) 9. What are the plausible reasons for these shortfalls? (2.1.2, 2.2.2, 2.3.2, 2.4.2) 10. Are you aware of the financial products, services, or applications developed under E-PESO? [If yes, go to Question 11. If not, go to Question 13] USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 114 11. What are the products that you know? (2.5) 12. How effective are these financial products, services, or applications in meeting the needs of low￾income clients? (2.5.1) 13. Had the pandemic not happened, what would have been the effect of meeting your company’s achievements related to the shift to the digital payment agenda? (2.6.1) SECTION 4 – SUSTAINABILITY 14. Is your company continuing the activities conducted under E_PESO? [If yes, go to Question 15. If not, go to Question 18] (3.1.2) 15. In what way is your company continuing the activities conducted under E-PESO? (3.1.2) 16. Is there sufficient organizational capacity to implement said activities? (3.1.2) 17. Are there indicative results from said activities? (3.1.2) 18. Are there other initiatives that your company is doing to further the shift to the digital payment agenda? (3.1) 19. What remains to be the advantage/s of using cash over e-payments? (3.2.1) 20. What are the incentives to further encourage the shift to digital payment? j. To encourage consumers? Are there specific considerations for disadvantaged Filipinos? (3.2.2, 3.2.5) 115 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV k. To encourage businesses? (3.2.2) l. To encourage government (national and local)? (3.2.2) 21. What do you think are the remaining challenges in the shift to the digital payment agenda, particularly for your company? (3.2.3) 22. What are other works needed to support the shift to digital payment agenda further? a. Concerning your company? (3.2.4) b. As a whole? [Including those outside your company.] (3.2.4) 23. What are other works needed to ensure that disadvantaged Filipinos don’t get left behind? (3.2.5) SECTION 5 – CONCLUSION 24. If E-PESO could be redesigned or re-implemented, what changes would you propose in light of what you now know? [This would be the final question] (3.2) 25. Are there any other insights that you wish to share with us? 26. Are there any data that you think would be useful for this evaluation? 27. Is there anyone else who you think would have valuable insights for this evaluation? [If applicable, ask who to contact for identified data gaps possibly.] [Thank the respondent for his/her time.] USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 116 [Tell the respondent that he/she is welcome to contact you to ask questions at a later date if they wish.] 117 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV ANNEX E: KEY INFORMANTS (PLANNED) TABLE 1. KEY INFORMANTS Raymond Estioko Senior Director Payment System Oversight Department BSP Major Counterpart Gemma Gabuya Pantawid Pamilyang Pilipino Program (4Ps) National Program Manager and Director DSWD Major Counterpart Clarito Alejandro Magsino Functional Group Head Internal Management Group DBM Major Counterpart Blesila Lantayona Undersecretary Regional Operations Group DTI Major Counterpart Lanee Cui￾David Deputy Commissioner Information System Bureau of Internal Revenue Major Counterpart Carmelita Araneta General Manager Philippine Payment Management Inc. Major Counterpart Mamerto "Mert" Tangonan Chief of Party Chemonics International Implementing Partner Melissa Cook Former Deputy Chief of Party (2015-2017) Chemonics International Implementing Partner John Geesnell Yap II City Mayor Tagbilaran City Participating LGU Maria Isabelle Climaco City Mayor Zamboanga City Participating LGU Marvin Santos Enterprise Head for the Public Sector PayMaya Private Sector TBD Private Sector USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 118 ANNEX F: WORK PLAN TABLE 1. WORK PLAN E-PESO EVALUATION SCHEDULE OCTOBER NOVEMBER DECEMBER JANUARY TASK START END 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 Inception Report 1.1 Review of materials/ tools development/ report writing 10/01/21 10/17/21 1.2 Kick-off Meeting 10/04/21 10/04/21 1.3 Submission to Panagora Activity Office (In briefing ppt) 10/11/21 10/11/21 1.4 In briefing 10/14/21 10/14/21 1.5 Submission to Panagora Activity Office (inception report) 10/18/21 10/18/21 1.6 Submission to Panagora Home Office (inception report) 10/22/21 10/22/21 1.7 Submission to USAID (inception report) 10/28/21 10/28/21 1.8 Inception report presentation 11/05/21 11/05/21 2 Preliminary Findings/ Interim briefing 119 | E-PESO EX-POST PERFORMANCE EVALUATION USAID.GOV TABLE 1. WORK PLAN E-PESO EVALUATION SCHEDULE OCTOBER NOVEMBER DECEMBER JANUARY 2.1 Data collection 10/18/21 11/19/21 2.1.1 Preparation of letters (endorsement from USAID) 10/18/21 10/22/21 2.1.2 Desk review 10/18/21 11/19/21 2.1.3 KIIs 11/03/21 11/19/21 2.2 Data processing and analysis 11/04/21 11/23/21 2.3 Submission to Panagora Activity Office (ppt) 11/24/21 11/24/21 2.4 Submission to Panagora Home Office (ppt) 12/01/21 12/01/21 2.5 Interim briefing 12/15/21 12/15/21 2.6 Submission of interim briefing documentation 12/17/21 12/17/21 3 Draft Report/ FCR workshop 3.1 Submission to Panagora Activity Office (narrative and ppt) 12/20/21 12/20/21 3.2 Submission to Panagora Home Office (narrative and ppt) 12/27/21 12/27/21 3.3 FCR Workshop (early January) 1/05/22 1/05/22 USAID.GOV E-PESO EX-POST PERFORMANCE EVALUATION | 120 TABLE 1. WORK PLAN E-PESO EVALUATION SCHEDULE OCTOBER NOVEMBER DECEMBER JANUARY 3.4 Submission to Panagora Activity Office (draft report) 12/27/22 12/27/22 3.5 Submission to Panagora Home Office (draft report) 1/03/22 1/03/22 3.6 Submission to USAID (draft report) 1/10/22 1/10/22 4 Final Report/ Learning Events 4.1 Draft revisions based on USAID comments 1/17/22 1/19/22 4.2 Submission to Panagora Activity Office 1/20/22 1/20/22 4.3 Submission to Panagora Home Office 1/24/22 1/24/22 4.4 Submission to USAID 1/31/22 1/31/22 4.5 Learning events (two events) - -