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37c2125Mobile phone penetration in the Philippines has far exceeded the population, with an estimated 107 out of 100 Filipinos owning a mobile phone at the end of 2013. And while the country has been in the mobile money space for more than a decade, the growth potential is still huge as the majority of the population still generally prefer to pay for products and services with cash.

Local operator & MEF member, Smart Communications, is looking at mobile money solutions as one of the future growth opportunities for the company. Lito Villanueva is  Vice President & Head of Innovation, Ecosystem Build & Global Engagements, at wholly-owned subsidiary Smart e-Money.

1)  The Philippines is one of the early adopters of mobile money

Smart Money, the world’s first mobile money wallet and card service linked to the phone was launched by Smart in 2000 and this has spawned similar products in other countries globally.

2)  Over 80 percent of payment transactions still done in cash

The majority of Filipinos still prefer to do physical and cash transactions over online and virtual purchases.  One of the deterrents to the usage of electronic payments is the transaction cost. The vast majority of the population is price sensitive.

3)  But mobile money platforms made the massive adoption of mobile phones possible

In 2003, Smart introduced Smart Load, allowing it to sell prepaid airtime in sachet-sized packs via phone-to-phone transactions.  This whole prepaid loading system runs on Smart’s mobile money platform. Today, you can get load packs of about 25 US cents.  Nine out of 10 Filipinos have mobile phones.

4)  Smartphone usage still low but growth in adoption in recent years is fast

While the penetration rate for mobile is very high, smartphone usage in the country is still at around 15 percent at the end of 2013, which is lower relative to its neighbors in Southeast Asia. However, from 2012 to 2013, smartphone growth was at 75 percent.  Mobile money is great tool for financial inclusion

Eight out of 10 households in the Philippines have limited or no access at all to modern financial services.  Harnessing the pervasive use of mobile phones in the country, Smart has come up with innovative products and services to expand the market for mobile money solutions and to help bring more Filipinos out of poverty.

It joins other MNOs, banks, micro-finance institutions, NGOs and monetary authorities in other emerging markets in pursuing financially inclusive initiatives using mobile money to reach those that are outside the economic mainstream.

Subsidiary Smart e-Money has partnered with LANDBANK for BayadLoad, which uses load as medium of payment; and Panalo SIKAP, a mobile-based credit, savings and livelihood program.

Smart e-Money also partnered with financial institutions, international donor community and government for IGNITE, a global launch pad for inclusive businesses that draw in low-income segments of the population into the formal economy through disruptive mobile innovations.

6) Launch of new electronic wallets and mobile money products

Smart has been expanding the mobile money ecosystem by introducing new electronic wallets that can handle transactions beyond cash and airtime load.

Duplicating the success of prepaid mobile phone services, Smart is working with sister firm Manila Electric Company, also the country’s largest distributor, to offer prepaid electricity services as part of a Smart Grid system that will help customers better manage their power consumption.  Another sister firm, Maynilad Water, which supplies water for half of Metro Manila, also has plans to offer a prepaid water service.

7)   Mobile money gives boost to government’s cash transfer program to the poor

Panalo SIKAP, which roughly translated means “winning through hard work”, is a mobile-based savings, credit, livelihood and insurance program launched by Smart e-Money that is closely tied to the Philippine government’s conditional cash transfer program.

8)  Mobile money has proven useful in helping facilitate humanitarian aid for disaster response

Smart’s mobile money platform was used to facilitate release of salaries of workers under the cash-for-work program of the United Nations Development Programme in Tacloban City following Typhoon Yolanda.  Through the HelpPH initiative, Smart’s mobile money platform was also used to enable mobile phone subscribers of other MNOs in other countries to donate to rehabilitation and recovery efforts via airtime load.


Lito Villanueva

Vice President & Head, Innovation, Ecosystem Build & Global Engagements

Smart e-Money

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9)  Mobile money is intersecting with new markets in digital space

Markets for online retail, gaming, cloud services and music, among others, have expanded the ecosystem for mobile money.  Smart, for instance, has partnered with MCA Universal to allow its subscribers to download and buy music via their mobile device using airtime load.

10) Highly regulated and very secure

Monetary authorities have put in place stringent rules for mobile banking as part of its mandate to keep the industry sound and robust, and to protect the consuming public.  Any bank or electronic money issuer like Smart has to go through regulatory approvals before any new product or service can be launched for commercial rollout.