How Remittance and Bill Payments Market Is Positioned in Philippines?
The Philippines economy was recorded as the 34th largest economy in the world by nominal GDP as of 2017 and has been one of the most emerging economies in the Asian region in the last few years. The economy of Philippines grew by ~% in 2017, augmenting below the majority of expectations, including the government’s estimate of a ~% to ~% growth. The total population in Philippines was recorded at ~ million in 2017, growing by ~% from ~ million in 2016. Approximately ~% of the population has inhabited two large islands. More than ~ million people, which is about half of the country’s total population, has resided on the main island of Luzon, where the capital, Manila is situated. Metro Manila, the capital, and the urban sprawl that surrounds it, has a population of more than ~ million as of 2016 and is one of the largest cities in the world.
The Overseas Filipino Workers (OFWs) space has been the most important source of growth in the Philippines economy. The sector has constantly showcased healthy performance with the deployment of OFWs augmenting at a compounded annual growth rate (CAGR) of ~% from 2012 to 2017. Total number of deployed land-based OFWs was ~ thousand in 2017 which increased from ~ thousand workers in 2012. The majority of the OFWs primarily originate from the Cavite, Laguna, Batangas, Rizal and Quezon (CALABARZON) region (approximately ~%), and the peripheral regions of Central Luzon (approximately ~%) and Metro Manila (approximately ~%).
The Bill Payment Market in the Philippines was recorded at USD ~ billion, in terms of transaction volume during 2017. However, the bill payment transaction volume has grown at a CAGR of ~% from USD ~ billion in 2012.
How Does Domestic Remittance Market Operates in Philippines?
The market for domestic money transfers in the Philippines is exceedingly dynamic and has been maturing since the past decade. Domestic money transfers encompass both remote money remittances and payment of bills. The enormous market of remittances has also engrossed international players such as Western Union and Money Gram into the domestic money transfer market. Conversely, the Philippines-based service providers such as banks, regional and national pawnshops, LBC Express, iRemit, Smart and others have a noteworthy presence in the domestic market and have provided stiff competition to the international players. Some of the largely used payment service providers in Philippines include Palawan Pawnshop, Western Union, Cebuana Lhuillier, LBC Express, M Lhuillier and other regional pawnshops.
The total market for domestic remittances was valued at USD ~ million in 2017 with around ~ million transactions. In-country Filipinos, characterized by domestic migrants who have moved for better economic and employment opportunities and permanent residents together, accounted for approximately ~% of the total domestic remittances. Additionally, approximately ~% of the overall domestic remittances was funded by people/families who have also received international remittances from Filipinos in other countries. Domestic remittances were observed to be transferred from ~ cities inside ~ provinces of the Philippines. The top 10 cities amongst these provinces included Quezon City, Manila, Makati, Caloocan, Paranaque, Pasig, Mandaluyong, Taguig, Pasay and Baguio.
What major Types of Services Offered in Philippines Domestic Remittance Market?
Filipinos have access to a gamut of remittance services offered by players in both the banking as well as the non-banking channel. The choice of these services largely depends on the quality, pricing, accessibility, convenience and a host of other benefits offered by the banks, money transfer companies and pawnshops. Some of the largely used remittance services in the Philippines constitute door-to-door delivery, branch pick-up, direct to account transfer and cash/pre-paid cards.
Owing to the prevalence of a significant number of remittance centers in the Philippines, the demand of branch pick-up remittance services has continued to outperform all the other remittance services in the country.
The total share of branch pick-up services in the total number of Philippines domestic remittance transactions was ~% in 2017, inclining from ~% in 2012. This incline was in commensuration with the opening up of several new remittance outlets, as an outcome of expansion strategies adopted by a number of remittance services providers.
What is Competitive Scenario in Philippines Domestic Remittance Market?
Competition in the Philippines domestic remittance market is very dynamic and there are many different players including banks, pawnshops and MTOs.
The market is led by the pawnshops namely Palawan Pawnshop, Cebuana Lhuillier, MLhuillier and others. Among the MTOs the market is led by few MTOs like LBC Express, Pinoy Express and Western Union followed by two major banks namely, Banco De Oro and Bank of Philippine Islands. Competition in the domestic remittance market of the country is highly concentrated as the top eight players in the market together held a share of ~% as of 2017 in terms of number of transactions. As of 2017, the market is dominated by Cebuana Lhuillier in terms of number of transactions followed by Palawan Pawnshops and M Lhuillier.
However in terms of the transaction volume Palawan pawnshop leads the market as of 2017 followed by Cebuana and M Lhuillier. However, the market is highly dynamic and Palawan Pawnshop is anticipated to be overtaken by Cebuana and M Lhuillier in the coming years. The players in the market largely compete on the basis of number of transactions, type of services, branches, fees and experience in the market.
What is the Future Outlook for Philippines Domestic Remittance Market?
The continued growth in internal migration is expected to sustain the growth of money transfers taking place in the Philippines. The Philippines has outshined India in terms of voice-based outsourced projects and has become the worldwide leader in the call center industry. Over the past six years, the BPO industry in the country has augmented at an average rate of ~% to ~%.
During the forecast period of 2018-2023, the domestic remittance market is expected to augment at a CAGR of ~% from USD ~ million in 2017 to USD ~ million in 2023.Domestic remittance market is currently dominated by the pawnshops and MTOs in the country and a very low market share is held by the banks in the market.
In the domestic remittance market the mode of remittances are expected to get more technologically advanced as the Filipinos are increasingly getting attracted towards online transfers and e-money. It is anticipated that the remittances through online mode shall grow at a CAGR of ~% during the forecast period 2017-2023. Such a trend is expected to augment the number of online services offered by the pawnshops, MTOs and Banks.
How Does Domestic Bill Payments Market Operate in Philippines?
The bill payment market in the Philippines was recorded at USD ~billion, in terms of transaction volume during 2017. Bill payment transaction volume has grown at a CAGR of ~% from USD ~ billion in 2012. A greater proportion of the bill payment has been utilized for the payment of utilities.
Utilities comprised of ~% of the total number of bill payments in the Philippines in 2017. Filipinos paid average bill amounts of PHP ~ as their basic utility charges as of 2017.
The utility bill payments were followed by payments for education which held a share of ~% in 2017. The third largest bill payment category for 2017 was ~% followed by payment for communication with a share of ~%.
Convenience stores such as 7-Eleven and Ministop were responsible for ~% of the total bill payments in the Philippines in 2017. Owing to the greater reach and accessibility; convenience stores have dominated the bill payment landscape in the Philippines over the past many years.
Bill payments through mobile and online platforms have displayed a tremendous growth over the past five years increasing from ~% in 2012 to ~% in 2017 increased internet and mobile payment methods offered by banks and other local players.
A noteworthy chunk of the population in the country has preferred to pay bills in cash directly at the biller offices with biller business offices registering a share of ~% in 2017. Money transfer organizations and remittance companies accounted for a ~% share of the total bill payment transactions in the Philippines in 2017.
What major Payment channels Operate in Philippines domestic Bill Payments Market?
Monthly regulation of majority of bill payments has significantly driven the business models of several service providers in the Philippines. In most cases, the billers have paid for transactions and not the consumers. A major chunk of the bill payments in the Philippines occur through the non-bank channel in the Philippines, which accounted for ~% of the total bill payment transaction volume in 2017, while bill payments through banks constituted the rest of ~% share. During 2012, the share of bill payments through non-banking channel stood at ~%; here we can observe that, by 2017, the share has been reduced by ~%. The major reason behind this is the increased accessibility of banks and its services among the public and the knowledge among the public related to its services. Government of the country is taking constant initiatives for financial inclusion in the country and to raise the number of physical bank branches and ATMs across the country.
How Does International Remittance Market Operates in Philippines?
The Philippines international remittance market registered a total of USD ~ million in inbound remittances from other countries in 2017 and showcased an annual growth rate of ~% from 2016. The total remittances from OFWs accounted for ~% of the country’s overall economic output in 2017. Stable progress in the diversity and coverage of global remittance networks has enabled more OFWs to remit money at a reasonable cost of services which include automated teller machines, web-based services, and reusable/reloadable cash cards.
The US accounted for ~% of the total remittances sent to the Philippines in 2017. From USD ~ million in 2012, remittances sent by Filipinos in the US have grown at a CAGR of ~%. With a percentage contribution of ~% in 2017, the UAE was ranked as the second largest remittance source for Philippines. Remittance from the UAE registered a total value of USD ~ million in 2011 and expanded to USD ~ million in 2017. Saudi Arabia accounted for a share of ~% in the remittance to Philippines in 2017 and is one of the biggest employers of OFWs.
International remittances showcased strong seasonal patterns, with month on month increases, particularly in the months of March and December. March is the month for graduations in the Philippines and remittances have inclined significantly in this month over the past five years. Remittances also exhibited an increase amid the holiday season especially in December as overseas Filipino workers send more money back home for Christmas festivities, gifts and other holiday related expenses.
What major Flow Corridors in Philippines International Remittance Market?
Philippines ranked as the third largest recipient of remittances worldwide in 2017 after India and China, followed by Mexico, France, Germany, Bangladesh, Belgium, Spain, and Nigeria. The Philippines received remittances from all over the globe. However, a momentous proportion of remittances were received from the US, followed by Saudi Arabia and UAE.
The US accounted for ~% of the total remittances sent to the Philippines in 2017, with the total remittance volume of USD ~ million. There had been a decline in the remittance during the year 2014 from the US against the previous year displaying a negative growth rate of ~%.
Remittances from UAE were ranked second in terms of transaction volume and contributed ~% to the total inbound remittance volume in Philippines in 2017. With a CAGR of ~%, during the review period 2012-2017, remittance volume from UAE have augmented from USD ~ million in 2012 to USD ~ million in 2017. Saudi Arabia has the largest Filipino population in the Middle East. Filipinos account for the fourth largest group of expatriates in Saudi Arabia, and are the third largest source of remittances to the Philippines. Remittances from Filipinos in Saudi Arabia have grown at a healthy CAGR of ~% during the review period 2012-2017. However, the total remittance volume from the UK stood at USD ~ million in 2016 and represented a CAGR of ~% from 2012-2017. There had been a decline in the in the remittances from UK in 2017 as against the year 2016 by ~%, due to the depreciation of the pound sterling with regard to the US dollar. However, the same is expected to recover in the coming years.
What is Competitive Scenario in Philippines International Remittance Market?
The continued expansion of remittances in the past several years has been impelled by the sustained innovation on the part of banks, money transfer companies and other financial institutions which provide remittance services to overseas Filipino workers. Majority of the money remittances received by Filipino households are routed through commercial banks. In 2017, banks absorbed ~% of the total remittances, indicating Filipinos’ mounting faith on this channel instead of sending money back home by means of friends or relatives. Remittances transferred through banks have showcased an inclining participation over the last five years. On the other hand, money transfer companies such as I-Remit, LBC Express, Western Union, Xoom and Money Gram were also important remittance channels for OFWs in the Philippines, recording a contribution of ~% to the total international remittance transaction volume in 2017.
What is the Future Outlook for Philippines International Remittance Market?
International remittance market in the Philippines will continue to be driven by the increasing deployment of Filipinos in other countries. Unskilled workers and laborers will uphold their status as the largest deployed fraction of overseas workers and will continue to account for the largest share of aggregate remittances. There had been an incline in the global remittances during the year 2017 which was led by the growth in Europe, the Russian Federation, and the United States. The rebound in remittances, when valued in U.S. dollars, was helped by higher oil prices and a strengthening of the euro and ruble. These factors have influenced the remittances to low and middle income countries the most, one among which is Philippines. It is expected that during the review period 2018-2020, the market size shall be augmented by these factors.
OFW remittances were valued at USD ~ million in the year 2017 and the value is expected to soar even further in the next five years. The Philippines international remittance market is expected to grow at a CAGR of ~%, from USD ~ million in 2017 to USD ~ million in 2023.
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