Almost 10 years ago, SEDPI conducted research on digital payments domestic demand for the Philippines. It was a contract under Bankable Frontier Associates commissioned by the Bill and Melinda Gates Foundation.
SEDPI was tasked to conduct the qualitative research and Social Weather Stations (SWS) was tasked to do the quantitative research. Nationwide, a total of 22 focus group discussions were conducted and 1,794 were interviewed.
We are again commissioned to conduct similar research but this time under the World Council of Credit Unions (WOCCU). Bill and Melinda Gates Foundation again commissioned the study.
Mobile money
Mobile money is cash deposited into an account linked to a mobile number. In the Philippines, There are two main mobile money products in the Philippines – Smart money and Gcash.
Low cost and formal
Smart money and Gcash are considered low-cost digital payment products since they offer the least cost in terms of fees to make transactions. These are also part of the formal financial sector because of direct regulation and supervision of the Bangko Sentral ng Pilipinas.
User preferences
The primary drivers for choosing formal digital payments are the speed of delivery and trust. These two are far more important than the price they have to pay for the service. In a sense, users are saying they are willing to pay for a premium for speed and security of their transactions.
Formal, lower-cost mobile money services like GCASH and Smart Money are not used much, according to respondents because of a mutually reinforcing combination of lack of trust, lack of awareness and lack of availability of cash merchants.
Very limited acceptability
Then, the problem was there was low acceptability of these two mobile payments. One could hardly find merchants that would accept mobile money payments.
Once you cash into either Smart money or GCash you are instantly limited with your transaction options. There is a feeling of being stuck which runs against the essence of a currency.
Interoperability challenge
Another setback for adoption then was Gcash and Smart money was not interoperable which means that they operate separately. Gcash could not be converted and used to Smart money and vice versa.
Way forward
With these findings in 2010, it is interesting to find out why the Philippines, the most social media savvy in the world, still does not embrace mobile money as a standard of making personal and business transactions.
Mobile money or digital finance, in general, could be used as a powerful tool for financial inclusion which is a necessary first step towards poverty alleviation. There is still remains much to be done so that Filipinos, especially the poor, could benefit from this technology.
