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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