Philippines: E-Money – FinTech!

Philippines: E-Money – FinTech!

We often hear about the great financial inclusion in East Africa occurring as a result of the take-up in m-payments. This is true, thanks to firms like M-Pesa and BitPesa. However, less stated is the quiet gathering storm in the Philippines which was introduced to m-payments and FinTech long before anywhere else. Here we take a look at the four factors responsible for the growth in FinTech in the Philippines.

There have been several factors contributing to the successful adoption of m-payments. These have been:

  • High mobile penetration
  • Early adoption of m-payment
  • Government regulation
  • Remittance Markets

High mobile penetration rate

According to the TNS Report – Mobile Life 2013 the Philippines (Manila focussed) had mobile and smart phone penetration rate of 89 and 53 per cent respectively an impressive jump year-on-year by 11 per cent. With a population of 100 million, the Philippines now has over 110 million mobile devices. More importantly, its population is keen on m-payment usage. In MasterCard’s Mobile Payment Readiness Index (2014), the Philippines’ consumer readiness – measuring how willing consumers to use m-payments – was fairly high at 34.7. Beating developed nations like France (31.2) and Germany (31.6), and not so far behind the UK (37.5).

Early Adoption

The ease at which Filipinos have adopted m-payments might be due in part to their early introduction to the concept. The Philippines’ population is spread across 11 Islands (though over 7,000 islands exist), and over 80 per cent of the population remain “unbanked/ underbanked”, forced to travel long distances to make simple financial transactions – in other words, there is a huge need for these services! In fact, it was under the country’s leading wireless provider – Smart Communications, that Filipinos were introduced to m-payments. In December 2000(!) Prior to the arrival of the smart phone and long before the financial cash of 2008, the Philippines was the first country to accept m-payments. It was soon followed by Globe Telecom in 2004, which launched GCASH.

Government Regulation

The government has also broadly been in favour of the use of m-payments. Bangko Sentral ng Pilipinas (BPS), the Philippines’ central bank, reports that registered “e-money” accounts (electronic money is synonymous with FinTech in general) grew by 34 per cent between 2010 and 2014. BPS has deliberately used e-money’s popularity to further its ambitions of improving financial inclusion: through government to people transfers (G2P) and people to government transfers (P2G) too.

Remittance Markets

According to the Commission of Filipinos Overseas (COFO) there are over 8.5millions Filipinos working aboard. Between them they sent home over $24.3million in 2014 according to BSP. It is this large amount which makes Filipinos the world’s third largest recipients of remittances meaning a lot of market potential. Most recent firms to take note of the potential in the Philippines is Regalii, a New York based FinTech firm dealing with financial remittance. The firm announced earlier this month its plans to expand its operations to the country. It joins WorldRemit, Azimo and Remitly, all of who are trying to lead the market.

Though a veteran in m-payments/ e-money there is still a lot of potential in the Philippines. Aside from this strong growth in m-payments, its economy has been favourably evaluated too. Though many people are focussing on its neighbours, Singapore, Hong Kong and perhaps South Korea, FinTech enthusiasts should not forget, there is still room here, where it all started.

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