Colloquium: Mobile 2.0: m-money for the unbanked

Posted on June 30, 2009  /  2 Comments

Colloquium conducted by Dr. Erwin Alampay of NCPAG, Philippines.

Presentation began by looking at the potential for M-money.

Why should we use m-money?

Improving efficiency: Improve services, financial services. BOP a target.

BOP (migrants) relies on various forms of remittances

Looking at Filipinos, 9% of BOP had a relative living abroad, and 13% in another part of the country, so there is a vested interest in m-money.

At present about 5% is going through informal channels according to the Filipino central bank. According to respondents about 80% sent through banks.

Workers need access to bank accounts in both the remitting and remitted country for remittances through banks. This is a limitation. M-money may not necessarily need an account in the remitting country.

Filipino workers generally prefere formal channels. Todays presentation will focus on m-money channels such as smart money of g-cash.

ADB: Transaction costs about 2.5%-3.5% of remittances.

For local remittances: Pawn shops used. Roughly remits around Php 500-1000. These are potential targets for m-money.

RS: How does the Pawn shops work? Pawn shops have a wide network, usually works through a call or SMS. A transaction number will be given to the person sending the money. The number will be given to the person who is due to receive the money. Identification is required for acquiring the cash. This is with regards to local remittances.

HG: Do the pawn shops work together, or is there a network that belong to one company. There is one network which has about 12,000 pawn shops.

Vasana: Are they licenced? EA: They are regulated by the central bank to a certain extend.

Central bank regulation is due to Anti Terrorism laws. Pawn shops charge a higher rate of interest. Technology is a catalyst for changing remittance landscape.

M-banking is one component of electronic money according to Circular 649 of Filipino Central Bank. M-Money is E-money stored in a mobile.

Electronic money defined as stored value or pre-paid payment mechanisms.

RS: can money loaded to the a pre-paid mobile account be refunded? EA: It is one of the issues which is going through regulatory process now.

3 modes of e-money issuers in Philippines: Bank (Smart money), Non bank financial institution recognised by BSP (Central Bank), Non bank registered with BSP as a money transfer agent (Example, GLOBE)

Registration is easier with Globe. Can do through SMS.

Looking at potential of M-money at the BOP the following method was used:
Method of access, Material access, skills access, Usage access

Method of access
Using LIRNEasia survey data, re-method of access, 566% of those who didnt use it said didnt know how to use it. According to focus group discussions, even though they were aware, they needed proof of efficiency, price.

With e-loading, familiarity with the Roman script is an advantage. If a person is familiar with transferring e-loads then using m-money will be easier.

Trust issues, Central bank looking at some of the issues. Security mechanisms such as PIN codes. At present Php 100,000 is the limit for any type of e-money. Same for M-money. Even if you have four m-money accounts, the total should be 100,000.

Material Access:
Only 13% of BOP have access to Bank accounts

On avearge there were 1.36 mobiles per household. More access to a mobile phones so there fore more potential for m-money.

Identification documents and physical access to cash in are seen as barriers to M-banking.

Individuals can get there m-money (Gcash) out from ATMs and cash in cash out venues. Therefore accessibility is an issue. There are already some Pawn shops being used as cash in cash out venues.

Can register from a distance but need to go to the bank to cash in. No identification cards in Philippines. Propoer identification is a problem in the Philippines.

Skills Access
40% of those surveyed in the LINREasia survey are familiar with e-loading.

99% of surveyed mobile users use SMS.

Filipinos top up small values at shorter time frames. Use to exchanging mobile top ups. This is consistent with remittance patterns.  Comparatively, Filipinos send money often in smaller amounts

GCASH and Smart are accepted as forms of payment in Philippines, but this maybe more common among the more affluent users.

GLOBE (2006): Transacting USD 117 Million on average.

SMART (2006) Transacting USD 257,200 average daily transactions.

HG: How much is charged for Transactions? EA: Basic of SMS cost, plus 1% of transaction cost or minimum of Php 10.

HG: Transmission takes one or multiple SMS? EA: Have to confirm but it maybe a minimum of 2 SMSs.

Challenges and Policy issues:

1) Developing mental access: Increasing awareness, better financial advantages.

2) Developing Material access: Making services that work with the kinds of phones used by BOP, making cash in/cash out more accessible.
Regulating GCASH and SMART:

100% reserve requirement

HG: 100% reserve requirement for just e-money or any transfer? EA: Thats for e-money.

HG: Is there a time limit on the money put in the e-money account? a 100% RR is very high. EA: They do not work as banks. Money is earned through transactions.

Policy Issues:
Security of the systems

prevention of fraud


Tracking users

Increasing access

RS: Comparisson with M-Pesa in Kenya will be useful.

HG: Comaprison with the regular banking transactions will also be useful.


  1. Chanuka Wattegama

    [Quote] BOP (migrants) relies on various forms of remitances [unquote]

    Any strong evidence on this? How come we missed this trend in the T@BOP?

  2. We did not miss any of it. The analysis of the migrant module was only completed last week. Pls see: