demand for domestic payments in the philippines: know your market
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Demand for Domestic Payments in the Philippines: Know Your Market
Research Sponsored by:
Study objectives
The domestic payments research in 2010 was intended to provide a clearer understanding of the following:• Composition of the current market for domestic payments
using demand side data• Latent demand for remote payment services • The main drivers causing non-users to become users and
users to switch between payment service providers• The ‘pain points’ of payers and their recipients with respect to
price sensitivity, accessibility, speed of delivery and trust for payment service providers.
MethodologyPrio
r research
• Reviewing earlier research on domestic payments
Focus groups
• 22 focus group discussions (FGDs) conducted by SEDPI
Intercept survey
• Interviews with 300 users on-site at their payment service providers
Pop survey
• Nationally representative data on all 1,794 adults interviewed
User
survey
• Nationally-representative survey of 1,000 active users of payment services
Lenses
• Personal payment instruments– Money transfer (MT)– Bills payment (BP)– Loan payments (LP)
• Payment methods– PSPs
• Formal PSP—banks, pawnshops, remittance agents, mobile money
• Informal PSP—friends, driver, etc– Direct pay
• At biller payment center
• Population– Payers: Made a payment in last 12 months– Non-payers: Did not make a payment in this period
Findings: 1. Focus Groups
• Primary purpose of MT is for emergencies or else household expenses, followed by education
• Main PSPs used are pawnshops (ML, Cebuana L. & other), Western Union, LBC and the bank transfer services
• Price confusion: generally did not know price structures• Respondents vaguely aware of mobile money services• Brand confusion over Smart Money/ Smart Money Transfer
and GCASH/ GCASH REMIT• Both rural and urban residents make use of informal services
Findings:2: Intercept survey
• Suggests that women are more likely to be payers• High awareness of five payment service providers: LBC, M.
Lhuillier, Western Union, Cebuana Lhuillier & payment centers• GCASH used within the NCR and in urban areas• Smart Money users send money to a mix of urban and rural
areas outside the Metro• Convenience and speed appear to be the major reasons for
choosing service providers for select users• Price sensitivity suggests that LBC, Cebuana and Western
Union are over-charging
None 28%
Transfer only 13%
Loan Only 2%
Bill only 30%
Transfer & Loan 2%
Bill & Loan 7%
Transfer & Bill 13%
Transfer & Bill & Loan 5%
National Payer Profile by Payment Type (n=1794)
Findings 3: National payer profile (All adults 95% CI, +/-3%)
Payment types of all adults
Bill payment 55%
Money transfer 33%
Loan payment 16%
Non Payers 28%
National adult survey: Who are the users of remote payment services?
• More female than male are users (68% vs 32%)• 76% of the users are classified under Class D (poor), while 19% belong to
class E (very poor) and 5% to Class ABC (upper and middle classes)• Most households where they live have electricity (96%), cellular phones
(71%) and running water (80%)
Other information:• 32% of users indicated they were willing to pay PhP 50 (median) for
remote bill payment services, e.g. via mobile phone or messenger• 24% report receiving money from abroad in the last 12 months• 7% of total users then on-send money to others (median: PhP 3,000)
Findings 4: Awareness and usage
LBC M
L
Wes
tern U
nion
Cebuan
a Lh.
Bank t
ransfe
r
Relative
s, driv
ers, e
tc.
Smart
Padala
Paymen
t cen
ter
Smart
Money
Other
pawnsh
ops
GCASH
Money
Gram
CGCASH REM
IT
Other
business
es0%
10%
20%
30%
40%
50%
60%
70%
80%
90%83%
78% 75%69% 68%
47% 46%39%
35%30% 30% 28% 28%
17%21% 23%
10% 7%
21%25%
4%
25%
1% 4%0% 0% 0%
5%
Awareness Usage
Shar
e of
use
rs (n
=1,0
00)
n=1000multiple responses
Findings on users of GXI and Smart PSPs
• Less than 4% of respondents have used either GXI or Smart products in the last 12 months (Smart Money, GCASH, Smart Padala or GREMIT)
• Mostly within the last 2-3 weeks of the survey – implying regular usage• GXI and Smart’s products are mainly used for sending money to other
people, not paying bills• 33% of non-users reported that the ability to make cross-payments
(GCASH<->Smart Money) would make them consider using these services• More granular results available from the intercept survey in NCR:
• GCASH and GREMIT users far more likely to be sending money within the NCR (45% of GCASH users)
• Smart Money users were split roughly 50/50 between sending money to urban and rural areas
• Confusion on price schedule for GCASH and Smart Money is apparent, but do not like “double charging”
Instrument usage per providern=1000
Paymen
t cen
ter
Other
busines
ses
Inform
al
Bank t
ransfe
r
Wes
tern U
nionLB
C
Other
pawn sh
ops
Cebuan
a ML
Smart
Padala
Smart
Money
0%
20%
40%
60%
80%
100%
120%
13%
33% 36%
44%
79%84%
95% 97% 96%100% 100%
86%
67%
57%51%
17%11%
4% 2% 1% 0% 0%
Sending money Paying bills/ loan
Median amounts transferred per transaction per PSP
n=1000
Bank transfer
Western Union
Payment center
ML LBC Cebuana Other pawn shops
Informal Other businesses
-
200
400
600
800
1,000
1,200
1,400
1,600
Chart Title
PhP
Users’ frequency of usage n=1000
Paymen
t cen
ter
Other
business
es
Bank t
ransfe
r
Informal
Smart
Padala
Wes
tern U
nion ML
LBC
Other
pawn sh
ops
Cebuan
a
Smart
Money
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
88%
72% 70%
62% 61%
46%43% 41% 41% 39% 40%
13%
27%30%
37% 38%
53%56%
60% 58%62%
70%
Once a month or more Several times a year at most
Conjoint analysis was used to quantify consumer preferences via ratings of generic payment services
Four attributes: speed, price, convenience and securityEach with two values, creating 16 possible combinationsConsumers were asked to rate a series of payment services 1-100
Ranking
1 Speed—immediate
2 Security--secure and reliable
3 Price—”reasonable fee”
4 Convenience
Findings: Price sensitivity analysis
Size of money transfer (PhP/US$)
1000$25
1001-3000$25-$75
3001-9000$75-$225
9,000+>$225
Acceptable price range (PhP) 38-62 80-155 150-280 230-410As a % 4-6% 5-8% 3-5% 3-5%
Using a series of price-fairness questions, it was possible to calculate a acceptable price range for different sizes of transactions:
Calculation from National Adult SurveyMoney Transfer
MT
Loan Payment
LP
Bill Payment
BP
A. National weighted median per transaction (PhP) 1,786 1,609 744
B. % performing payment type(population-weighted)
32.8% 15.9% 55.2%
C. No. adults in Philippines 57.2 m 57.2 m 57.2 m
Total amount sent(A*B*C)
PhP 33 billion
PhP 15 billion
PhP 23 billion
Total Monthly PhP 71 billion/ US$1.7bn
Finding: Market size Domestic personal payments per month
n=1794
Conclusions
• The Filipino domestic payments market is highly competitive and maturing
• Awareness of PSPs is high but knowledge and usage of mobile banking products and services are low
• Users of informal service providers are a stable, geographical market
• The demand for national domestic payments is significant, but little unmet need
Full report is available athttp://www.bankablefrontier.com/assets/pdfs/
BMGF.PDP-FinalReport-dec2010.pdf
Slide Annex
Graphing the response curves to the four questions…
Size of money transfer (PhP) 1000 1001-3000 3001-9,000 9,000+Acceptable price range (PhP) 38-62 80-155 150-280 230-410