session 2: innovative remittance and mobile money products challenges and developments...

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Caribbean Remittances Forum

Session 2:

Innovative Remittance and Mobile Money Products

Challenges and Developments in the Philippines

Bangko Sentral ng Pilipinas

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Presentation Outline

Philippine Mobile Money Scenario

Approaches to Mobile Commerce and

Emerging Models

Enabling Environment for Mobile

Commerce/E-Money

Related Philippine Laws

Central Bank Regulations

Recent Issuances

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Philippine Mobile Money Scenario

Non-bank institutions offering financial

products, including those not traditionally

supervised by the central bank

Use of third-party service providers by

banks and non-bank institutions

Various technologies and business models

Complex partnerships

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Approaches to Mobile Commerce

Bank-Centric or the Bank-led model

Telco-Centric or the Nonbank-led model

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Approaches to Mobile Commerce

Bank-Led

The bank has the primary relationship with the

account holders

Telco operates and maintains the technology

Usually requires the user to have an account

with the bank that is not treated as a deposit

but an electronic money (e-money)

The bank is the E-money Issuer (EMI)

Telco’s agents serve as cash in-cash out

centers

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Bank-led Model

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Registering to the Smart Money

1 User goes to the

Smart Wireless Center to register (name, address, number) and present valid ID

2 User will

receive the Smart money card

3 User can

convert actual cash to electronic money in MIMO centers

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Approaches to Mobile Commerce

Telco-Centric/Nonbank-Led

Telco has a subsidiary which operates the e-

money business

Said Telco subsidiary has the primary

relationship with the account holders

Said Telco subsidiary is the E-money Issuer

(EMI)

Bank participation limited to “clearing”

Banks serve as cash-in/-out agents of the EMI

along with the EMI’s agents

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Nonbank-led Model

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Registering to the G-cash Service

1 User will register in the system by sending an SMS of key information (name, address, number)

2 User will receive a reference no. as acknowledgement

3 User can go to any Cash In center to convert actual cash to electronic money

4 After verification, the e-money will be registered on the mobile phone with a reference number

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Emerging Models

As to purpose

Non-remittance uses for e-money

Designed for retail payments

Cash-in intended for usage, not

withdrawals

End-to-end process (purchase to delivery)

In line with central bank policy of

inclusive finance

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Emerging Models

As to organization

Branchless banking

Bank provides banking services,

especially microfinance

Partners with a non-bank E-Money

Issuer

Allows depositors/clients to access

banking services in mobile manner

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Enabling Environment to E-Money

1. Allow non-banks to offer mobile money

2. Remittance Agents allowed to perform Cash-In/Cash-Out

3. Simplification of requirements for KYC

4. Formalized guidelines on issuance of electronic money

5. Competitive business models allowed to be tested

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Related Philippine Laws

General Banking Law

Central Bank Act

Electronic Commerce Act

Anti-money Laundering Act

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Central Bank Regulations

E-Banking (2000)

Outsourcing (2000)

Remittance and Money Transfer Agents

Registration (2005)

Consumer Protection for E-Banking(2006)

Technology Risk Management (2006)

E-Money Issuance (2009)

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Recent Issuances

Circular 704 (2010) – guidelines on outsourcing

of services of EMIs to E-Money Network Service

Providers (EMNSP)

Recognizes the specialized operational and

technological requirements of e-money business

Provides additional guidelines from the regular

outsourcing framework of the BSP

Expected to bring about increase in the number of

EMIs

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EMNSPs are non-financial institutions

that provide

automated systems

Network infrastructure

network of accredited agents

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EMNSPs can enable clients of EMIs to

perform the following:

Convert cash to e-money and monetize

e-money

Transfer funds from one e-wallet to

another

Use e-money as a means of payment

Conduct similar or related activities

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Recent Issuances

Circular 706 (2011) – Updated Anti-Money

Laundering Rules and Regulations

Customer Acceptance Policy

Enhanced Due Diligence

Reduced Due Diligence

Outsourcing Arrangement for KYC

Face-to-face contact

Gathering of minimum information/documents

Third-party reliance

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THANK YOU!!!

nguinto@bsp.gov.ph