In 2020 the remittance payment sector accounted for 9.66% of the Philippines GDP or approximately $34.9 billion USD, while the world average is less than 1%. This high number ranks the Philippines as 4th in the world for these types of payments. Because of how vital the sector is, remittance startups are beginning to pop up all over the country, and people are becoming increasingly popular. The remittance payment Philippines startup ecosystem continued to evolve, despite COVID-19 related economic hardships further highlighting the country’s reliance on money from workers abroad.
What is a remittance payment?
Generally, considered a payment sent overseas to another person or party, the term can also apply to any bill payment and is often described as money sent home by someone working abroad.
We explore how fintech in The Philippines in evolving in 2021
With so many people from the Philippines working abroad, remittance payments play a considerable role. Many families rely on the money sent back to them by parents, children or distant relatives to survive, putting this type of transaction in a central position in the country’s economy.
As fintech in the Philippines evolves, eWallets with built-in remittance features are becoming increasingly popular. GCash is one company at the forefront of this trend of digital payments and online remittance. The app allows users to store up to ₱50,000 PHP for free and transfer ₱10,000 PHP each month.
Before the pandemic, these eWallets, while popular, were not as widespread. However, when most countries worldwide began to emerge from the worst of the health crisis and resume their normal daily lives, the families back home who were still unable to work, were desperate for money.
Most financial services in the Philippines other than GCash and some of its fellow fintech startups such as PayMaya require an extensive registration process with high minimum entry requirements. GCash made things more straightforward, and it allows anybody to sign up and use its services.
Due to its accessibility and the increased demand for digital remittance payments, it saw its business grow at a tremendous rate. Its savings product, GSave, grew to over ₱9 billion PHP as of 2021 (more than 170 million USD), having ended 2020 at only ₱5 billion PHP (more than 98 million USD). GCash offers more than just remittance payments. It is an extremely versatile eWallet letting users shop online, purchase items in bricks and mortar stores and pay them off at a fixed rate over time. They can also open savings accounts and even monitor their credit score through an inbuilt mechanism called GScore.
Another competitor in the fintech market is Azimo. Although based in Europe, Azimo partnered with the blockchain company Ripple in early 2020 to allow people to send cross-border payments into the Philippines faster and cheaper. Ripple does this using the digital asset or cryptocurrency known as XRP. Azimo’s CEO Richard Ambrose has said, “Ripple’s ODL solution has significantly reduced the cost and delivery time for cross-border transfers, and our customers are seeing the benefits.”
Even former professional boxer Manny Pacquiao decided to get in on the action by developing his own payment platform, PacPay. He stated that his mission was to make global transactions a much simpler task for his fellow Filipino workers, saying, “This will make cross-border transactions easier for our countrymen especially the OFWs”. To entice users to sign up, he offered a unique rewards program that includes autographed merchandise and tickets to fights.
In August 2021, PacPay launched as a limited edition digital card. Pacquiao has also stated that part of the proceeds from the use of the eWallet will go towards financing charity projects in his home country.
Fintech trends amidst the pandemic
While lockdowns eased up in some countries around the world, such as New Zealand and parts of America, in the Philippines, many lockdown measures were still in place. This inspired many people working overseas to send some of their earnings back home to support their families. Many eWallets and fintech solutions stepped up to the plate, offering a way to solve the problem of transferring cash through quick and easy transactions from one eWallet to another.
Overseas workers could now financially support their families with ease thanks to the many companies providing remittance payment and digital payments options. These new online options now make up approximately 33% of the fintech landscape in the Philippines.
While the pandemic has negatively affected large numbers of businesses globally, it has also sparked growth in an emerging sector of the fintech industry. And thanks to this growth, many remittance startups have grown and expanded rapidly to bring more services to the Filipino people.
The remittance payment Philippines landscape arguably upholds a large part of the country’s economy due to the heavy reliance on money coming from abroad. Many investors and companies worldwide are now seeking to invest in the sector in the Philippines to try and get a piece of this rapidly growing pie which is likely to continue to increase in 2022.