According to the Bangko Sentral ng Pilipinas (BSP), lack of awareness and lack of connectivity are closely associated with the slow adoption of electronic platforms,46% of account holders who have access to the internet are ambivalent about e-payments due to issues such as hacking, personal security breaches, and unsafe access Chinese mobile wallet giants, Alipay and Tencent brought their rivalry in the Philippines as they partner up with the duopoly of telco mobile wallets, GCash & Paymaya. The two platforms play catch up; with GCash leading in building traction and Paymaya in gaining users In the Philippines, only 34.5% of adult Filipinos have bank accounts, the lowest among the five largest economies in Southeast Asia, yet 60% have smartphones Electronic transactions in the Philippines have increased by 10% just in the first quarter of 2018 compared to the 3% of 2015. This growth is heavily attributed to the adoption of the Quick Response code (QR Code) in support of the BSP’s program called National Retail Payment System. The initiative aims to create a safe, efficient and reliable electronic retail payment system promoting financial inclusion. Though the BSP is still on the process of standardizing QR code payments for the different financial sectors including banks; local mobile wallet players like GCash and PayMaya are facilitating QR payments on selected establishments across the country as early as 2017. Struggling for public acceptance Distance to access points are a common reason why a lot of Filipinos are still unbanked, utilization of digital options of other island groups with no access to formal financial institutions are a major factor in boosting financial inclusion. Source: Asian Banker Research *Pay Maya 2018 data is based on projection. No Actual Number of Users has been released by them. Fintech start up Coins.ph exponentially increased their users from 1.5 Million at the end of 2017 to 5 million at the end of 2018 as they expand their services from crypto currency exchange to providing services similar to the telco mobile wallet apps. Meanwhile, GrabPay from the ride hailing app giant Grab makes their mobile wallet feature available to all of their users in the Philippines. Despite this rapid growth, players are still struggling to beat their primary contender, Cash. With the BSP’s latest survey citing that Personal purchases as well as bills and loan payments are the typical payment transactions of Filipino adults, whereincash accounted to 99% of local transactions as of 2018. Balancing the ecosystem between consumers and merchants is critical for industry players to increase adaption. To achieve this, aside from partnerships with e commerce sites, entertainment platforms and travel apps; various marketing programs including social media ads, loyalty programs, cashbacks and discounts have been rolled out by players to promote consumer acceptance. On the side of merchants, scan to pay features, faster checkout time, infrastructure that facilitates mobile payments that won’t require them to shell out substantial capitalization will make the shift more attractive. Aside from that, consumers and merchants are also looking for lower fees, a wide range of top-ups as well as convenient cash out methods when choosing their mobile wallets. With this slow adoption, GCash seems to lead the race thanks to its first mover advantage, thinking that direct peer-to-peer (P2P) transfers are the future, they reduced human intervention In transactions by moving away from sari-sari store facilitated remittance, mostly in the provinces, and focusing on the tech-savvy users of the urban areas. GCash is rapidly developing to become a lifestyle super app as evidenced by its scan to pay features, where users can pay directly on Lazada, pay using credit (via GCredit), invest in money market funds, transfer funds to partnered banks and even lets Alipay users in Hong Kong directly send money to GCash users in the Philippines. Its strong contender, PayMaya is yet to move away from sari-sari store transactions because of the strong demand of its Smart Padala, remittance service from the BOP market mostly situated at the rural areas with no reliable internet connection. The users of their platform may seem large but it’s primarily because it is joined with SmartPadala users with a remittance purpose and not exactly on the use of mobile wallet payment system. Unique to PayMaya is the payout feature that offers disbursement solutions for payroll, allowances and incentives for the use of companies, schools and other organizations; from there users can do a range of transactions online and with its growing partner merchants. The BSP’s over 3,000 employees’ uses the said payout feature. Coming from telco companies, these two mobile wallets have the strongest brand recall among the players. Meanwhile Coins.ph establishes a strong business reputation because of its expanding features. Though cryptocurrencies, such as bitcoins, are currently catering for niche user categories, their blockchain technology has the potential of becoming the foundation of a wide range of new services and can act as a tool for improvement of current market offerings by making it faster and cheaper. Grab on the other hand is yet to launch the full features of their mobile wallet, GrabPay, but after beating out Uber in South East Asia, their regional presence is strengthened not only in ride hailing but also with the other services being rolled out in its ecosystem. The e payment scene has opportunities for exponential growth but there’s still a lot of work in order to achieve that, though GCash is leading the race with more traction because of its services, the market still has room for other competitors to join in and the road to consolidation is still far away. The two leading mobile wallet platforms, has a high burn rate, throwing out cash to support costly promos, discounts and cashbacks to ultimately gain market share, the runway for these players will have to be longer and the pockets deeper to become profitable. Forging successful brand partnerships for growth China, where it’s possible to live without paper money and plastic cards and even beggars are using mobile wallets to collect handouts, digital revolution is led by two big players. Alipay and Tenpay. Now, these two giant companies are starting to grow their overseas presence and the Philippines is one of them. Last 2017, Chinese billionaire, Jack Ma’s Ant Financial which developed Alipay landed on the Philippines through an investment in Globe Fintech Innovations, Inc. (Mynt) to scale up digital payments in the Country. "By jointly establishing this QR code with Alipay, all merchants working with GCash will be able to accept Alipay as a payment option for Chinese travellers in their stores, while also catering to the local user pool that have now grown to love our cashless lifestyle app," said Mynt chief executive officer Anthony Thomas. Echoing the move, PayMaya, the digital unit of the PLDT group’s Voyager Innovations, signed an agreement with Tencent Holdings Ltd. And Kohlberg Kravis Roberts & Co. (KKR) to acquire $175 million worth of shares in Voyager. Tencent wants PayMaya to penetrate 50% of Philippines adult population, 40 million users, by 2022. Making their previous target of 30 million a minimum. Other players also sought big investment backers including fintech start up, Coins.ph. Go-Jek, Indonesia’s ride hailing app, announced that it has acquired Coins.ph through a “substantial investment” making it the company’s majority stake holder. Meanwhile, ride hailing app Grab, with its established presence in the country, has recently received green light by the BSP to roll out its other mobile payment services. Banking industry evolving to cater modern customers The awareness for digital options are gradually growing and more customers have begun to recognize the importance of online banking capabilities, forcing traditional banks to launch new products and enhance their digital capabilities to keep up. While traditional banking has its advantages the allure of online banking is primarily driven by its convenience. More and more banks are offering mobile apps that can facilitate online money transfers and bills payment capabilities. The BSP has required all banks and other financial institutions that offer online banking services to make interbank electronic fund transfers (EFTs) available to its depositors. Another move seen in the past year is the migration of ATM debit cards to EMV (Europay, Mastercard, Visa) technology that features a more enhanced security capabilities and convenience in terms of payment as it is widely accepted as a payment mode in establishments and online transactions. Banks are also in partnership with mobile wallet platforms in terms of top ups and cash out. With its strong economic growth, tech savvy population, digital shift in the banking sector and technology being integrated to businesses, the future of mobile payments in the Philippines is still on its way, who will emerge on top is still yet to pan out. Electronic transactions in the Philippines have increased by 10% just in the first quarter of 2018 compared to the 3% of 2015. This growth is heavily attributed to the adoption of the Quick Response code (QR Code) in support of the BSP’s program called National Retail Payment System. The initiative aims to create a safe, efficient and reliable electronic retail payment system promoting financial inclusion. Though the BSP is still on the process of standardizing QR code payments for the different financial sectors including banks; local mobile wallet players like GCash and PayMaya are facilitating QR payments on selected establishments across the country as early as 2017. Struggling for public acceptance Distance to access points are a common reason why a lot of Filipinos are still unbanked, utilization of digital options of other island groups with no access to formal financial institutions are a major factor in boosting financial inclusion.
