MANILA, MAY 2020 - E-MONEY is seen to continue flourishing in the Philippines, with transaction volume and wallet inflow reaching P370 billion and P700 billion by 2021, respectively, according to a strategic advisory firm.
YCP Solidiance, in its report titled “The Digitization of the Philippine Wallet: E-Money’s Emergence in the Philippines,” said that growth in e-wallet usage will be supported by service offerings of financial technology players and banks, such as bills and merchant payment capabilities.
“This highlights the significance for these mobile wallet companies to fortify their existing capabilities by acquiring more merchants for their platforms and to continue introducing new use-cases geared towards making the lives of Filipino people easier,” the firm said.
Citing data from the Bangko Sentral ng Pilipinas (BSP), YCP noted that e-money had an 8-percent compound annual growth rate (CAGR) in amount flows and 15 percent in amount usage during 2014-2018. Usage, in terms of transaction count, had 36-percent CAGR during the same period.
“Such is indicative of an e-money and digital wallet industry that will continue to grow in the next few years,” it added.
The advisory firm said that bulk, or 81 percent of the e-money inflows, came from universal and commercial banks, registering P443.26 billion in 2018. This was 8.12 percent higher than the P407.25 billion notched the previous year. It had a CAGR of 9 percent in 2014-2018.
This was followed by e-money issuers, comprising 16 percent or P89.29 billion of the total e-money inflows in 2018. It recorded 11-percent CAGR within a five-year period beginning 2014.
“Fund transfer remains to be the largest use-case for e-money, but the high growth rates for merchant and bill payments indicate that these use-cases will be on a par in terms of size within the next decade,” YCP said.
In 2018, fund transfers accounted for 74 percent of the total e-money usage, amounting to P182.07 billion. Combining bill and merchant payments, they comprised 16 percent or P38.63 billion of the total e-money transactions in 2018
Customers can get a hold of e-money through prepaid cards and mobile wallets, YCP said. “The former was introduced by the country’s top commercial banks and even by the established mobile wallet companies. The latter leads the e-money industry in terms of innovation,” it added.
Majority or 31 of the 45 local commercial banks acquired an electronic money issuer license, introducing prepaid card alternatives to traditional bank accounts. YCP said that this segment was being driven by Rizal Commercial Banking Corp. (RCBC) and BDO Unibank Inc.
In terms of transaction volume, RCBC MyWallet took the lead with P55.7 billion in 2017, followed by BDO Cash Card at P52.4 billion the same year.
Ayala-led G-Xchange Inc.’s GCash, meanwhile, is the front runner for the mobile wallet segment, recording most downloads and users. As of April 2019, the
“GCash is a clear leader in the mobile wallet segment, having approximately thrice the average downloads of its competitors,” YCP said.
This was followed by Coins.ph and PayMaya Philippines Inc.
Toward financial inclusion
The advisory firm noted that the Bangko Sentral ng Pilipinas (BSP) has been introducing initiatives to promote financial inclusion such as PESONet and InstaPay which allow electronic funds transfer service.
“E-money may not carry the benefit of earning a deposit, but the ease of opening an e-money account and the variety of services it introduces, such as online bills payment and instant fund transfers, make it a key tool in achieving the BSP’s goal of financial inclusion,” YCP added.
According to BSP’s Financial Inclusion Survey in 2017, only 22.6 percent or 22.8 million Filipinos have a bank account.