E-money in the Philippines is made accessible either through prepaid cards or mobile wallets which will likely change the payment landscape in the country. With around 99% of payments in the country are still made in cash, banks and mobile wallet companies are growing their services and innovations to boost e-money usage.
Prepaids to Access the Unbanked Population
Prepaid cards have allowed banks to access previously unaddressed segments of the population, with a much simpler process relative to opening up a bank account. The latest report from YCP Solidiance, titled “The Digitization of the Philippine Wallet: E-Money’s Emergence in the Philippines”, recorded that among the 45 commercial banks in the Philippines, 31 have acquired an Electronic Money Issuer (EMI) license.
They have introduced their own prepaid card alternatives to traditional bank accounts. In addition, mobile wallet companies such as GCash and PayMaya have also released their own physical prepaid cards as a complement to their mobile wallets.
According to the report, RCBC and BDO, two of the country’s top 10 commercial banks, have consistently remained as the most used prepaid cards in terms of transaction volumes. Following these two cards are the prepaid card options from the mobile wallet companies, PayMaya and GCash.
Digital Wallets Lead the Innovations
The report also showed that E-money Issuers, comprising of the mobile wallet companies, is leading other categories in terms of e-money usage.
The growth has overtaken the banks’ in 2018, presenting the growing significance of e-money in the industry which is also changing spending behaviors of the Filipinos. According to the report, the mobile wallet will likely be the key industry in driving awareness and the behavior to use e-money in the country, as evidenced by its sharp 33% CAGR for usage.
Today, the Philippine mobile wallet industry is driven by three major players, namely GCash, Coins.ph, and PayMaya, with all having received hefty financial backing from other Asian digital wallet companies. GrabPay, which recently has acquired its license to issue e-money, is looming as a potentially large competitor as well. There are also other companies that have acquired a license to issue e-money, with a few that have already announced plans to launch a mobile wallet in the country.
Cooperative Competition is a Key Success Factor
The report highlighted that underlying all the competition in this burgeoning industry, collaboration among the stakeholders is the key to driving the total growth of e-money and realizing the goal of financial inclusion in the Philippines. As these different companies try to firm up their positions in the industry, more people will be brought into the digital wallet ecosystem, and they will benefit from these continuously improving e-money products.
In tandem with the efforts of the private companies are the support and willingness to accept innovation that is upheld by the central bank. Such principles are instrumental in paving the way for every Filipino to have a digital wallet by allowing different e-wallet companies to experiment and improve their services.
Among the mobile wallet companies, established players are likely to retain their competitive position, given their massive lead in resources and equity. However, given the success of the industry as a whole, it is possible to see one of the emerging mobile wallet companies to develop their businesses and secure investment in the future.