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Bright Future of Digital Remittances in the Philippines

Updated on Feb 24, 2020
Future of PHP Remittances

The digital transaction is becoming the new normal in the Philippines. This is especially true for the consumers who are not just seeking an isolated digital transaction but the whole experience. 

While credit and debit card use in developed countries like the US and Canada dominate the eCommerce markets, emerging countries like India and China have found a good alliance in digital wallets. For example, in China, 50% of eCommerce is serviced by digital payment transactions.



The challenge for the Philippines is that cash still accounts for the majority of the online purchases. The restriction on the growth of payment could be for several factors:

  • Card infrastructure needs improvement to meet the current standard
  • There is a high percentage of unbanked consumers. In a survey conducted by the Bangko Sentral ng Pilipinas (BSP) in 2017, around 77% of Filipino adults did not have bank accounts and remain unbanked.
  • Lack of consumer confidence due to the growing concern around card fraud and an increase in card-related scams.

Digitalization of the Remittance industry 

The Philippines is one of the top remittance-receiving countries in the world, trailing behind India, China, and Mexico, according to a World Bank report. For a country that receives $30 billion a year in remittances from the Overseas Filipino Workers (OFW), the remittance industry of the Philippines has become a fierce battleground for remittance service providers. The remittance service providers include banks, traditional remittance service providers, new entrants, pawn shops, cryptocurrencies, and courier service providers.  



Competing on factors that have the most impact like lower fees, high exchange rates, and faster speed of delivery startups, both homegrown and external, western players are able to challenge the traditional banks and international money transfer service providers.

Digitalization in the remittance industry is enabled by fintech and the internet. As a result, we see higher penetration and financial inclusion in regions where there is a good infrastructure. And inversely, lack of good infrastructure and awareness are the biggest challenges to digitalization. 

Digitalization has helped solve many problems that were plaguing the money transfer industry namely: cost, speed, and convenience. 

Cost: Remittance players are able to bring down the cost of operations by riding on technology to facilitate services without an extensive network. 

Speed: The speed of transactions is faster. Often by paying a premium, you can get instant transfers made to the beneficiary. Money can be transferred to bank accounts, collected in cash, delivered in cash at the doorstep or even added to a mobile wallet. 

Convenience: One can send money anytime from anywhere. Digitalization is led by online and mobile growth. If one had to look for the nearest Westen Union near me in the past, now you can simply go on the app and make the transfer. Smart users use Comparison tools like CompareRemit to find the best deal. 

Security: Sending money online is one of the safest ways of sending money. And added safety measures and transaction tracking facilities are some of the ways international money transfer players are trying to address the consumer’s concern over security. 

One of the significant contributors to the continuous surge in remittances has been digitization, leading to digital remittances gaining momentum in the last few years. The pace at which digital remittances are growing outnumbers the overall growth rate observed within the global money transfer industry.

Digital remittances are expected to have a CAGR of 23.8% by 2025. The reasons for this growth are not limited to but inclusive of the factors mentioned above. 

Top players in the digitalization of the remittance industry in the Philippines 

International money transfer players will undoubtedly bank on the appetite for better, faster, and cheaper services to test disruptive ideas that will sustain and harness the growth of digitalization in the remittance industry. Who are the top international money transfer players

  • TransferWise: A unicorn founded in the United Kingdom is valued over $1 billion. It is best known for transparency in their fees and high exchange rate. Check out the complete guide on TransferWise on CompareRemit.
  • Remitly: A Seattle based startup and a compatriot of TransferWise. Known for its speed, convenience, and transparent fees. Find out what our consumers are saying about Remitly.
  • InstaReM: Founded in Singapore, InstaReM is designed for both peer-to-peer and business-to-business remittances proving mid-market exchange rates. It is especially popular in Southeast Asian countries including the Philippines. See what they have on offer on CompareRemit’s coupons and promotion section here.

Building strength through partnerships

Pawn shops: Although 77% of the population is unbanked, the Philippines is home to around 20000 pawn shops. Pawn shops have evolved from a place you could count on when you’re in a pinch to a powerful network to facilitate international money transfers in the Philippines. Partnering with these pawn shops allows for money transfer companies to expand their reach and accessibility throughout the country. More on where to pick up remittances from pawnshops in the Philippines here.

Here are some examples: 

  • Xoom, a PayPal company offers multiple receiving options; banks, remittance centers, doorstep delivery, and pawn shops including the popular ones like Cebuana Lhuillier and Palawan Pawnshop.
  • P.J. Lhuillier, the parent company of Cebuana Lhuillier invested in SCI Ventures last year. SCI stands for Satoshi Citadel Industries (Bitmarket.ph Inc.) is a fintech company building the Blockchain ecosystem in the Philippines.

The growing synergy in the remittance space enhanced by technological advancement and partnerships in the Philippines between banks, national postal services, pawnshops, and money transfer service providers is expected to strengthen and grow the market further.

Blockchain and digitalization of the remittance industry in the Philippines

Blockchain, the distributed digital ledger technology behind cryptocurrencies such as bitcoin, is gaining popularity in the Philippines. Companies such as SCI Ventures offer app-based money transfers that involve converting funds into bitcoin temporarily. The cost of remittance is one of the major factors that impact the global money transfer industry. Blockchain’s decentralization helps bring down fees through technology by reducing cost on infrastructure.

Blockchain is expected to have a large impact on the global remittance market. Even traditional players like Western Union are investing heavily in new technologies and cryptocurrencies. With its announcement to partner with Coins.ph in the Philippines, 5 million users to receive money transfers through Western Union directly into their e-wallets on the app.

The Future of Remittances in the Philippines

Total-Transaction-Value-of-Digital-Remittance-in-the-Philippines-

Blockchain and cryptocurrency technologies are still developing but increased regulation to fight potential financial crimes might slow down the growth of digitalization in the remittance industry. However, Digitalization is inevitable and with an incentive from the central bank, it is expected to achieve SDG goals. Bangko Sentral ng Pilipinas (BSP) set a target for digital payment transactions to hit about 20% of the total payment transaction by 2019. Following the increased interest and development in blockchain technologies, BSP is drafting new regulations on the bitcoin money transfer industry to encourage the use of digital transactions in the Philippines.

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