MICROCAPITAL BRIEF: The Philippines Mobile Banking Market Handles $10b in Transactions

Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, reportedly has indicated that the number of mobile banking transactions in the country has reached an aggregate of 150 million, totaling PHP 440 billion (USD 10.4 billion) through December 2010. The Philippines was recently recognized by the GSM (Global System for Mobile Communications) Association, an association of 800 mobile operators and approximately 200 related companies, as “among the most advanced mobile money markets in the world.” Mobile banking is defined as “performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone.” GSMA cited three contributing factors for the success of mobile banking in the Philippines: 1) the high SMS (short-message service, also known as text messaging) literacy rate of Filipino mobile users; 2) the involvement of BSP in supporting mobile banking, such as through BSP Circular 649, which established a regulatory framework for e-money and e-money issuers; and 3) actions taken by two of the country’s telecommunications companies – Smart Communications (SMART) and Globe Telecom. In 2001, SMART partnered with Banco de Oroa, a Filipino commercial bank, to launch “SMART Money,” a service that enables users to transfer money both domestically and internationally via mobile and to pay for goods using a card. In 2004, Globe Telecom launched an SMS-based mobile wallet service called “GCASH” that offers functions similar to that of SMART Money via mobile phones. In 2010, Globe Telecom launched an automatic teller machine card linked to a mobile wallet, called “GCASH Card,” which gives its subscribers access to GCASH day and night.