Philippines is a massive market in South East Asia, one of the world’s fastest growing economic regions. The total population surpassed 106 million in 2016 and, according to GlobalData, GDP is expected to grow by almost 60%, or 10% CAGR over the next five years.
As a result, the Philippines is a prime market for financial services like payments, savings and loans.
However, cash remains the most popular consumer payment instrument in the Philippines. It accounts for 99.5% of the country’s total payment transaction volume in 2017.
This is mainly due to the high unbanked population. However, the inadequate banking infrastructure, limited public awareness of electronic payments, and low acceptance of payment cards also plays a role.
In 2017, only 36% of the population held a bank account, and payment card penetration was only 60% (compare to China’s 480%).
Unbanked? Mobile to the rescue
While only 36% of Filipinos held a bank account in 2017, mobile account penetration was a whopping 115%. Further, more than 69% of Filipinos used a smartphone, surpassing the number of payments cards.
One of Philippines leading telecom operators – Globe – is taking advantage of this penetration gap and is offering innovative financial services to anyone with a mobile number.
Globe’s flagship service isGcash. Initially Gcash started as a service that enables users to send money to anyone in the country who also has a mobile number. Further Gcash also offers merchant and ecommerce payment services enabling users to shop in malls or online using only their mobile phone.
This type of mobile wallet is common in Philippines, South East Asia and worldwide, with many mobile operators and third parties offering basic peer to peer payment services to their customers, however more recently Globe has begun venturing into more innovative territory.
Telecom leading financial innovation
Gcash also offers a remittance service, important for Philippines where international remittance accounted for 10% of GDP in 2017. The company is innovating in this space with partner AliPay, now offering a near instant remittance service from Hong Kong using Block chain.
Many Filipinos lack bank accounts or any kind of credit history, making access to credit via traditional channels very difficult. However, Globe, beginning in 2017, bypasses traditional “Know Your Customer” requirements by using customer identity and behavior data, including personal data recorded when a mobile account is opened, bill payment history, top-up history, Gcash spending, among others, and can offer small personal loans to its customers through its subsidiary FUSE and a product integrated with Gcash, called Gcredit.
Gcash also offers a business product called “Power Pay” that enable small businesses to accept QR code based payments, run employee salary disbursements and even extend employees payday loans.
Partnerships for success
Globe’s Gcash is enabled by several key partnerships. Ant Financial, the international arm of Alibaba’s Alipay acquired a 45% stake in Gcash in late 2017, and has since helped the company roll-out QR code based payments. These payments make P2P and merchant transactions even simpler.
Another critical partner for Globe and Gcash is Ayala Corp. Ayala is a Philippines conglomerate and operates one of the largest mall networks in Philippines. Starting in 2017 merchants at all Ayala malls across the country began accepting Gcash as a form of payment. This greatly expanded Gcash’s list of participating merchants.
MasterCard has also partnered with Gcash to offer users a virtual card for online purchases from merchants outside the network.
Through these partnerships Globe’s Gcash has been able to add real value for users. In addition, it wants to make headway in the Philippines payments market. Gcash’s 5.1 million users in 2017 puts it in competition with Mastercard and Visa, which each held around seven million debit card users.
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