Mobile Banking in the Philippines

In the Philippines, where there are 35 million mobile phone users an estimated 200.000 SMS messages sent per day (Añes, Aquino, et al, 2009), it is no surprise that mobile banking use is quickly growing as well. While there are bank-initiated mobile applications such as those by Chinabank , Allied Bank and the Bancnet network,the most notable mobile banking application is that of Globe Telecom's GCash.

This section will briefly discuss GCash and its counterpart from competitor telecom SMART, SMART Money.

G-Cash

In 1998, with support from the United States Agency for International Development (USAID) the Rural Bankers Association of the Philippines launched the Microenterprise Access to Banking Services (MABS) program with technical assistance and implementation provided by Chemonics International. This initiative is designed to accelerate national economic transformation in partnership with the Philippine rural banking industry to significantly expand access to financial services for microentrepreneurs and other lower income groups.

Since 2004, the MABS Program has partnered with G-XChange, Inc (GXI), a wholly owned subsidiary of Globe Telecom, in the development and implementation of mobile phone banking applications and mobile commerce services for rural banks and their clients. Approved by the Bangko Sentral ng Pilipinas (BSP), rural banks can now offer electronically-driven financial services in the comfort of their homes, business, or offices
- Background on Mobile Phone Banking and Mobile Commerce Initiative

With the GCash concept, ones SIM Card becomes an "electronic wallet" which can store, receive, and send "electronic cash" through text messages from a mobile phone. Real cash must first be converted into cash (cashing-in or cash-in). Electronic cash can also be converted back into real cash (cash-out). Authorized e-cash merchants are allowed to do this conversion. Selected banks also allow that the electronic cash be transferred to ones bank account, and can thereby be withdrawn in cash through an ATM machine.

Real cash must first be received by an authorized "e-cash merchant" who then converts this into e-cash (also through text), and sends this to the e-cash customer (the one having his cash converted). This process is similar to purchasing "e-load" from an authorized merchant. The e-cash can then be sent to another person's e-wallet, or used to pay bills and other applications.

To get real cash from the e-wallet, the e-wallet owner simply proceeds to an authorized merchant and accomplishes a required set of instructions (including typing in the PIN number which was required upon registration into the GCash system). If everything is in order, the merchant will release the cash.

Mobile Banking Services for Rural Banks
The GXI and RBAP partnership has developed BSP-approved mobile banking services such as Text-a-deposit, Text-a-withdrawal and Text-a-remittance.

Latest information online supports that there are about 500,000 GCash users in the country today. Four years since GCash was launched, 43 rural banks with 453 branches have become GCash partners all across the country have been accredited as GCash partners and now offer cash-in and cash-out services with the majority of these banks also offering the MABS-developed mobile phone banking services that utilize the GCash platform.

SMART Money
Competitor SMART offers a slightly different money transfer system, used by about 5 million Filipinos, that links cash or a debit card to a cellphone.

Users load up on their phones with money via text messages, similar to the cash-in procedure described above. The card, which does not require a bank account, can then be used to purchase goods in establishments that accept MasterCard or to withdraw cash from an ATM machine.

Like Globe's GCash, SMART Money allows fund transfers from one SMART Money user to another, bills payment, cash conversion (however, through ATM only), and purchase (for establishments who accept MasterCard).

Unlike Globe's GCash, however, applying for a SMART Money service requires submission of an application and a confirmation call from a SMART representative, while GCash only requires texting. SMART Money is tied up with most major commercial banks, and offers mobile banking services such as account balance inquiries, fund transfers (from one account to another), and airtime reloading. Selected banks offer remittance services via SMART Money.

The SMART Money platform is not yet used as extensively for Mobile Banking the way the GCash platform is being used, and has not yet reached the rural bank sector. SMART Money still does not have services similar to GCash's Text-a-deposit (transfer of e-cash to bank account) service and Text-a-withdrawal (from bank account to e-cash).

Sources:
Background on Mobile Phone Banking and Mobile Commerce Initiative, Website:http://www.mobilephonebanking.rbap.org/page/about us)

SMART Money, Website: http://www.smart.com.ph/money/

Teves, Oliver, Cell phones double as electronic wallets in the Philippines,
Website: http://mobilephonebanking.rbap.org/article/articleview/62/1/19/

Viloria, Manuel, Mobile Banking in the Philippines,
Website: http://www.viloria.com/secondthoughts/archives/00001400.html

Chinabank Online Mobile Banking, Website: http://www.chinabank.ph/personal/pagedetail.aspx?id=5C6F4973-F1DA-48E5-A6BD-67409CB6520E&link=20f445a8-3971-4b81-b42f-8c4a5aba7792

Allied Bank Online Banking, Website: http://www.alliedbank.com.ph/insidesection.php?level=2&secid=415&secpid=3

Bancnet Mobile Service (MBS), Website: http://www.bancnetonline.com/aboutmobile.html