Interoperability issues drag PHL shift to mobile money

The Philippines has introduced one of the world's first telco-led mobile payment platforms, but interoperability issues have kept Filipinos from embracing the service.

 

An integrated electronic payments scheme gives low-income Filipinos access formal financial services such as bank savings and loans, Nataliya Mylenko, senior financial sector specialist at the World Bank, told reporters on Wednesday.  

 

Poor Filipinos tend to borrow money from "5-6" lenders and other informal channels due to the difficulty of proving their creditworthiness with banks, Justin Ho, vice president for mobile financial services at Amdocs Singapore Pte. Ltd. said in a separate briefing. 

 

Five-six loans are subject to high interest rates. A P1,000 debt, for instance, could balloon to P8,916 after a year.

 

"If you are not part of the financial system today, there is no way for you to get a credit score. For those people who cannot get access to credit score, there are new ways to do that — we can look at your payments history in your mobile financial services platform," Ho said.

 

In promoting financial inclusion, the Bangko Sentral ng Pilipinas (BSP) is pushing for a National Retail Payments System (NRPS) that would allow more Filipinos to transact using mobile devices in place of cash.

 

"The Philippines is actually one of the first countries that came out with their mobile payments solutions such as the GCash and SMART Money. But the uptake for these products is quite low actually," Mylenko said. 

 

A global survey on mobile financial services revealed that security (38 percent), ease of use (33 percent) and service fees (30 percent) are the top consumer concerns when it comes to shifting toward electronic payments, according to Amdocs. 

 

"It takes time for people to get adjusted to the technology and to develop trust in that technology. In the Philippines, the additional issue is the interoperability of the systems," Mylenko said. 

 

The World Bank official believes the next frontier for service providers is to make refinements that would allow, for instance, subscribers of Globe Telecom Inc. to transfer money to people using the services of Smart Communications Inc. and vice versa.

 

"Unless there is a payments ecosystem, where you can interact across the whole economy, it is hard for the people to get into it; cash would still be better," Mylenko said. 

 

But identification and other know-your-customer requirements have more material impact on the level of consumer uptake in mobile money transactions, Smart Public Affairs head Ramon Isberto told GMA News Online on Thursday. 

 

In the World Bank survey, many respondents have cited the lack of documents such as multiple identification cards as one obstacle they experienced in opening bank accounts. 

 

"In any case, we are pursuing discussions toward interoperability with the assistance of the BSP and the Global Association of Mobile Operators," Isberto added. 

 

40% smartphone penetration

 

Nevertheless, software solutions and services provider Amdocs charted a bright prospect for the local mobile financial services industry because of the continuing rise in smartphone penetration in the Philippines.

 

Around 40 percent of Filipinos is expected to own smartphones by year end, an increase from the 30 percent recorded in 2014, according to Globe data culled from the third Southeast Asia and Oceania Region Appendix to the Ericsson Mobility Report. 

 

"We are not in the infancy stage by any means, but we're not in the mass market. Within the next five years [mobile financial services] will be mainstreamed," Ho said. 

 

Smart Communications believes the level of consumer uptake in the Philippines lags behind East Africa only in terms of the number of accounts.

 

"The level of usage of mobile money in the Philippines is high. In the case of cash transfers, for example, SMART Money is already the biggest platform for domestic remittances, accounting for about 30 percent of the market," Isberto noted. 

 

The use of mobile money is expected to further proliferate with the development of e-commerce.

 

The Philippine central bank is serious with its financial inclusion agenda, but the high cost of growing the branch network of financial institutions serves as an impediment to reaching the unbanked,  Mylenko said. 

 

"The physical presence is quite difficult for them to get into. This is where I think the excitement about the mobile is so strong in the Philippines," she added. – VS, GMA News