The Philippine remittance market revenue, which was at $680 million last year, is expected to grow to $1.84 billion by 2030, or a compounded annual growth rate of 13.3 percent.
A report by Grand View Research explained that the increasing migration of Filipino citizens to other countries as well as the high dependency of Filipinos on remittance are among the major factors driving the market’s growth.
In addition, it noted that the growing technological advancements in the banking and finance industry, such as the integration of blockchain technology in remittance platforms, have created new growth opportunities for the industry. These digitally enabled remittance platforms, the study pointed out, enable Filipinos to conduct real-time cross-border money transfers seamlessly.
It mentioned that in September 2021, Western Union, a financial services company, and Cebuana Lhuillier, a money transfer service provider based in the Philippines, launched digital money transfer services which enabled Western Union customers to receive and send money transactions through Cebuana Lhuillier’s mobile application called eCebuana.
The study also revealed that the market is growth due to the easy educational loans for higher studies resulting in the migration of students for educational purposes. This migration, it said, increases the outward remittance of the country.
It likewise mentioned that the increasing dominance of the market players in the country is another major factor responsible for the growth, with companies providing remittance services increasingly involved in expanding their businesses to the Philippines due to the huge remittance market in the country.
In July 2022, Maxitransfers LLC, a remittance service provider, announced its expansion to Vietnam and the Philippines, allowing immigrant communities in the US to send remittances to their families here.
But the same study pointed out that though the market is growing, the inadequate anti-money laundering governance in the Philippines is expected to restrain growth. It said that while the Philippines is highly dependent on remittances, it has a lesser set of regulations for fintech companies, making it vulnerable to money laundering.
It however noted that the country is working on the regulations and according to the Philippine Anti-Money Laundering Council, the country is expected to exit the gray list of the Financial Action Task Force this year.
In 2021, the traditional or non-digital segment still dominated the remittance market with a revenue share of more than 61 percent, which was attributed to the ease in transferring money by just depositing cash or paying with debit cards and other payment methods while sending the remittance. Traditional remittances, the study explained, help receivers collect the remittance amount in cash without having a bank account.
But the same study revealed that the digital remittance segment is expected to register the fastest growth from 2022-2030. Digital remittance enables individuals to send money using a digital platform that results in sending remittances remotely. The study explained that the growth of the digital segment could be attributed to its benefits such as faster money transfers and lower transactional charges as compared to traditional remittances.
It added that the increasing launches of digital remittance platforms in the Philippines are expected to drive the further growth of the segment. In August 2021, PeraHub, the Philippine-based financial services hub, partnered with Brankas, an Indonesian open API technology vendor, to build Pera Hub Conex, a digital remittance platform which is expected to offer international and domestic remittances, among others.
The study explained that the inward remittance segment accounted for more than 61 percent of the revenues and the increasing migration of Filipinos in search of better job opportunities and higher education is expected to drive the growth of the segment, as well as the availability of plenty of cheaper remittance options such as digital remittances used by migrants to send money to their families in the Philippines.
Meanwhile, the outward remittance segment is expected to register significant growth, owing to the availability of several remittance service providers enabling businesses and individuals to send money from the Philippines to other countries and the increased migration of students for higher education from the Philippines.
But who are the players in the Philippine remittance industry?
The study mentioned that money transfer operators held the largest revenue share of more than 58 percent in 2021. MTOs are financial companies assisting individuals in cross-border processing remittances.
It said that the increasing partnerships and collaboration between MTOs for broadening their services are also expected to drive the growth of the segment. In 2019, Xpress Money partnered with Philippine-based courier company LBC Express to broaden the reach of remittance services in the country.
The online platforms or wallets segment, the study also revealed, is anticipated to register the fastest growth given the technological advancements in artificial intelligence and blockchain technology. In 2019, Western Union partnered with Coins.ph, a blockchain start up.
It added that the increasing penetration of smartphones and the internet in the country has driven the adoption of online platforms for processing and receiving remittance digitally.
The study likewise revealed that major players are facing fierce competition and are adopting several strategies to gain market share, including integration of blockchain for faster remittances. Last July 2022, Qatar National Bank announced the launch of direct remittance services for money transfers from Qatar to the Philippines through RippleNet, enabling bank customers to send faster cross-border payments.
Some prominent players in the Philippine remittance market include PayPal Holdings, WorldRemit, Union Bank, Western Union, MoneyGram, Cebuana Lhuillier, LBC Express, MLhuillier, Palawan Pawnshop and RD Pawnshop although Cebuana, LBC, and the pawnshops only cater to domestic remittances.
While the COVID-19 pandemic adversely affected the Philippine remittance market, it also helped boost the importance and popularity of digital remittance services.
London-based WorldRemit, a pioneer in the digital remittance service in the Philippines and one of the biggest players in the local market, experienced how the pandemic, which in its early days prevented people from leaving their homes, forced Filipinos to adapt and learn new ways of receiving and sending money, thereby helping jumpstart the adoption of digital money transfers. But even with movement restrictions already gone, Filipinos continue to use digital means to receive and send money due to the convenience that it offers.
Tomorrow, this column will feature an exclusive interview with WorldRemit Philippines country director Earl Melivo who will talk about industry prospects and how the company is evolving to continually meet the needs of its customers.
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